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110th Congress                                                   Report
                                 SENATE
 2d Session                                                     110-333

======================================================================



 
          INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 2009

                                _______
                                

                  May 8, 2008.--Ordered to be printed

                                _______
                                

  Mr. Rockefeller, from the Committee on Intelligence, submitted the 
                               following

                              R E P O R T

                             together with

                     ADDITIONAL AND MINORITY VIEWS

                         [To accompany S. 2996]

    The Select Committee on Intelligence, having considered an 
original bill (S. 2996) to authorize appropriations for fiscal 
year 2009 for intelligence and intelligence-related activities 
of the United States Government, the Community Management 
Account, and the Central Intelligence Agency Retirement and 
Disability System, and for other purposes, reports favorably 
thereon and recommends that the bill do pass.

                CLASSIFIED ANNEX TO THE COMMITTEE REPORT

    The classified nature of United States intelligence 
activities precludes disclosure by the Committee of details of 
its budgetary recommendations. The Committee has prepared a 
classified annex to this report that contains a classified 
Schedule of Authorizations. The Schedule of Authorizations is 
incorporated by reference in the Act and has the legal status 
of public law. The classified annex is made available to the 
Committees of Appropriations of the Senate and the House of 
Representatives and to the President. It is also available for 
review by any Member of the Senate subject to the provisions of 
Senate Resolution 400 of the 94th Congress (1976).

              SECTION-BY-SECTION ANALYSIS AND EXPLANATION

    The following is a section-by-section analysis and 
explanation of the Intelligence Authorization Act for Fiscal 
Year 2009 that is being reported by the Committee. Following 
that analysis and explanation, the report sets forth Committee 
comments on other matters. The report also includes additional 
views offered by Members of the Committee.

              TITLE I--BUDGET AND PERSONNEL AUTHORIZATIONS


Section 101. Authorization of appropriations

    Section 101 lists the United States Government departments, 
agencies, and other elements for which the Act authorizes 
appropriations for intelligence and intelligence-related 
activities for fiscal year 2009.

Section 102. Classified schedule of authorizations

    Section 102 provides that the details of the amounts 
authorized to be appropriated for intelligence and 
intelligence-related activities and the applicable personnel 
levels for fiscal year 2009 are contained in a classified 
Schedule of Authorizations and that the classified Schedule of 
Authorizations shall be made available to the Committees on 
Appropriations of the Senate and House of Representatives and 
to the President.

Section 103. Personnel level adjustments

    Section 103(a) provides that the Director of National 
Intelligence (DNI), with approval of the Director of the Office 
of Management and Budget (OMB), may authorize employment of 
civilian personnel in fiscal year 2009 in excess of the number 
of authorized personnel levels by an amount not exceeding 5 
percent (rather than the 2 percent in prior law) of the total 
limit applicable to each Intelligence Community (IC) element 
under Section 102. The DNI may do so only if necessary to the 
performance of important intelligence functions. Any exercise 
of this authority must be reported in advance to the 
congressional intelligence committees.
    Although prior intelligence authorization acts have not 
defined IC personnel limits in terms of full-time equivalent 
positions, the Committee has determined it would be consistent 
with general governmental practice to do so. This will enable 
IC elements to count two half-time employees as holding the 
equivalent of one full-time position, rather than counting them 
as two employees against a ceiling.
    In the Administration's request for legislative authorities 
as part of the Intelligence Authorization Act for Fiscal Year 
2008, the DNI asked for broad authority to manage the IC within 
the limits of available funds but without legislatively-fixed 
civilian end-strength personnel limits. The DNI's submission to 
the Committee stated that statutory ceilings have led to 
increased use of contractors and have hindered the IC's 
civilian joint duty, student employment, and National 
Intelligence Reserve Corps programs.
    During consideration of the fiscal year 2008 request, the 
congressional intelligence committees learned that practices 
within different elements of the Intelligence Community on the 
counting of personnel are inconsistent, and include not 
counting certain personnel at all against personnel ceilings. 
The discretionary authority that is granted to the DNI in 
Section 103(b) will permit the DNI to authorize Intelligence 
Community elements to continue their existing methods of 
counting, or not counting, part-time employees against 
personnel ceilings, while ensuring that by the beginning of 
fiscal year 2010 there is a uniform and accurate method of 
counting all Intelligence Community employees under a system of 
personnel levels expressed as full-time equivalents. To ensure 
that the transition is complete by the beginning of fiscal year 
2010, paragraph (4) of Section 103(b) provides that the DNI 
shall express the personnel level for all civilian employees of 
the Intelligence Community as full-time equivalent positions in 
the congressional budget justifications for that fiscal year.
    Section 103(c) provides additional flexibility when the 
heads of IC elements determine that work currently performed by 
contractors should be performed by government employees. It 
does so by authorizing the DNI, with OMB's approval, to 
authorize employment of additional full-time equivalent 
personnel in a number equal to the number of contractor 
employees currently performing that work. Any exercise of this 
authority should be reported in advance to the congressional 
intelligence committees and should be implemented in accordance 
with a plan that includes adequate support for personnel. This 
matter is further addressed in Section 305 of the bill.

Section 104. Intelligence Community Management Account

    Section 104 authorizes appropriations for the Intelligence 
Community Management Account (ICMA) of the DNI and sets the 
authorized full-time or full-time equivalent personnel levels 
for the elements within the ICMA for fiscal year 2009.
    Subsection (a) authorizes appropriations of $696,742,000 
for fiscal year 2009 for the activities of the ICMA. Subsection 
(b) authorizes 944 full-time equivalent personnel for elements 
within the ICMA for fiscal year 2009 and provides that such 
personnel may be permanent employees of the Office of the 
Director of National Intelligence (ODNI) or detailed from other 
elements of the United States Government.
    Subsection (c) provides that personnel level flexibility 
available to the DNI under Section 103 is also available to the 
DNI in adjusting personnel levels within the ICMA. Subsection 
(d) authorizes additional appropriations and personnel for the 
classified Community Management Account as specified in the 
classified Schedule of Authorizations and permits the funding 
for advanced research and development to remain available 
through September 30, 2010.

 TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM


Section 201. Authorization of appropriations

    Section 201 authorizes appropriations in the amount of 
$279,200,000 for fiscal year 2009 for the Central Intelligence 
Agency (CIA) Retirement and Disability Fund.

Section 202. Technical modifications to mandatory retirement provision 
        of the Central Intelligence Agency Retirement Act

    Section 202 updates the CIA Retirement Act to reflect the 
Agency's use of pay levels rather than pay grades within the 
Senior Intelligence Service.

           TITLE III--GENERAL INTELLIGENCE COMMUNITY MATTERS


                     Subtitle A--Personnel Matters


Section 301. Increase in employee compensation and benefits authorized 
        by law

    Section 301 provides that funds authorized to be 
appropriated by this Act for salary, pay, retirement, and other 
benefits for federal employees may be increased by such 
additional or supplemental amounts as may be necessary for 
increases in compensation or benefits authorized by law.

Section 302. Enhanced flexibility in non-reimbursable details to 
        elements of the intelligence community

    Section 302 expands from one year to up to three years the 
length of time that United States Government personnel may be 
detailed to the ODNI on a non-reimbursable basis under which 
the employee continues to be paid by the sending agency. To 
utilize this authority, the joint agreement of the DNI and the 
head of the detailing element is required. As explained by the 
DNI, this authority will provide flexibility for the ODNI to 
receive support from other elements of the IC for community-
wide activities where both the sending agency and the ODNI 
would benefit from the detail.

Section 303. Enhancement of authority of the Director of National 
        Intelligence for flexible personnel management among the 
        elements of the intelligence community

    Section 303 adds three subsections to Section 102A of the 
National Security Act of 1947 (50 U.S.C. 403-1), all intended 
to promote the DNI's ability to manage all the elements of the 
IC as a single cohesive community.
    Subsection 102A(s) enables the DNI, with concurrence of a 
department or agency head, to convert competitive service 
positions and incumbents within an IC element to excepted 
positions. In requesting this authority, the DNI points out 
that because of their unique intelligence, investigative and 
national security missions, most IC elements are in the 
excepted civil service. However, civilian employees in several 
smaller IC elements are still covered under competitive service 
rules. The ability to convert those to the excepted service 
will enable the IC to maintain a system throughout the 
Intelligence Community that is responsive to the needs of the 
IC both for secrecy and the ability to respond quickly to 
personnel requirements. Subsection 102A(s) additionally allows 
the DNI to establish the classification and ranges of rates of 
basic pay for positions so converted.
    Subsection 102A (t) provides enhanced pay authority for 
critical positions in portions of the IC where that authority 
does not now exist. It allows the DNI to authorize the head of 
a department or agency with an IC element to fix a rate of 
compensation in excess of applicable limits with respect to a 
position that requires an extremely high level of expertise and 
is critical to accomplishing an important mission. A rate of 
pay higher than Executive Level II would require written 
approval of the DNI. A rate of pay higher than Executive Level 
I would require written approval of the President in response 
to a DNI request.
    Subsection 102A(u) grants authority to the DNI to authorize 
IC elements, with concurrence of the concerned department or 
agency head, and in coordination with the Director of the 
Office of Personnel Management, to adopt compensation, 
performance management, and scholarship authority that have 
been authorized for any other IC element if the DNI determines 
that the adoption of such authority would improve the 
management and performance of the intelligence community and 
notice is provided to the congressional intelligence committees 
no later than 60 days in advance of adoption of the authority.

Section 304. Delegation of authority for travel on common carriers for 
        intelligence collection personnel

    Section 116 of the National Security Act of 1947 (50 U.S.C. 
404k) allows the DNI to authorize travel on any common carrier 
when it is consistent with IC mission requirements or, more 
specifically, is required for cover purposes, operational 
needs, or other exceptional circumstances. As presently 
written, the DNI may only delegate this authority to the 
Principal Deputy DNI or, with respect to CIA employees, to the 
Director of the CIA.
    Section 304 provides that the DNI may delegate the 
authority in Section 116 of the National Security Act of 1947 
to the head of any IC element. This expansion is consistent 
with the view of the Committee that the DNI should be able to 
delegate authority throughout the IC when such delegation 
serves the overall interests of the IC.
    Section 304 also provides that the head of an IC element to 
which travel authority has been delegated is also empowered to 
delegate it to senior officials of the element as specified in 
guidelines issued by the DNI. This allows for administrative 
flexibility consistent with the guidance of the DNI for the 
entire IC. To facilitate oversight, the DNI shall submit the 
guidelines to the congressional intelligence committees.

Section 305. Annual personnel level assessments for the intelligence 
        community

    Section 305 adds a new oversight mechanism to the National 
Security Act of 1947 (50 U.S.C. 413 et seq.) that requires the 
DNI to conduct, in consultation with the head of the element of 
the Intelligence Community concerned, an annual personnel level 
assessment for each of the elements within the Intelligence 
Community and provide those assessments with the submission of 
the President's budget request each year.
    The assessment consists of four parts. First, the 
assessment must provide basic personnel and contractor 
information for the concerned element of the Intelligence 
Community. It requires that the data be compared against 
current fiscal year, the upcoming fiscal year, and--for 
government personnel--historical five-year numbers and funding 
levels. Second, the assessment must include a written 
justification for the requested funding levels. This 
requirement is necessary to ensure that any personnel cost cuts 
or increases are fully documented and justified. Third, the 
assessment must contain a statement by the DNI that based upon 
current and projected funding the concerned element will have 
the internal infrastructure, training resources, and sufficient 
funding to support the administrative and operational 
activities of the requested personnel and contractor levels. 
Finally, the assessment must contain a list of all contractors 
that have been the subject of an investigation by the inspector 
general of any element of the Intelligence Community during the 
previous fiscal year or that are or have been the subject of an 
investigation during the current fiscal year.
    The Committee believes that the personnel level assessment 
tool is necessary for the Executive branch and Congress to 
fully understand the consequences of modifying the Intelligence 
Community's personnel levels. This assessment process is 
essential to the adoption and continuation of the personnel 
level flexibility authority provided in Section 103. In the 
aftermath of the terrorist attacks on September 11, 2001, the 
Administration undertook sharp increases in personnel for the 
Intelligence Community under the assumption that the 
intelligence deficiencies leading up to the attacks resulted 
from personnel shortfalls. Various external reviews have also 
recommended more personnel. Since the attacks, Intelligence 
Community personnel end strength has grown by about 20 percent.
    The Committee originally supported personnel growth as a 
way to strengthen intelligence collection, analysis, and 
dissemination, but now questions its previous position for four 
reasons: (1) the recent history of large scale personnel growth 
indicates that personnel increases do not improve performance 
commensurate with the cost; (2) the Administration is not 
adequately funding the personnel growth it has planned; (3) 
hiring additional personnel diverts fiscal resources from both 
current mission and modernization needs; and (4) personnel 
costs always increase, while budgets do not. Therefore, when 
overall budgets do not keep pace with inflation and decline in 
real terms, personnel costs as a percentage of the budget 
increase each year and divert funds from operations and 
modernization.
    In February 2005, the Committee initiated an audit to 
examine the full scope of activities and resources necessary to 
support the Administration's projections for Intelligence 
Community personnel growth during fiscal years 2006-2011. As a 
result of this review and further study of the issue, the 
Committee has concluded that increasing personnel without a 
plan for enabling those personnel to work productively does not 
prevent intelligence failures, or guarantee enhanced 
performance. The Committee also concluded that the 
Administration has not adequately funded its personnel growth 
plan and that resources provided for personnel growth in some 
cases have been at the expense of other programs.
    Another concern of the Committee is the Intelligence 
Community's increasing reliance upon contractors to meet 
mission requirements. It has been estimated that the average 
annual cost of a United States Government civilian employee is 
$126,500, while the average annual cost of a ``fully loaded'' 
(including overhead) core contractor is $250,000. Given this 
cost disparity, the Committee believes that the Intelligence 
Community should strive in the long-term to reduce its 
dependence upon contractors. The Committee believes that the 
annual personnel assessment tool will assist the DNI and the 
congressional intelligence committees in arriving at an 
appropriate balance of contractors and permanent government 
employees.

                    Subtitle B--Acquisition Matters


Section 311. Reports on the acquisition of major systems

    Section 311 amends Section 102A(q)(C) of the National 
Security Act of 1947 (50 U.S.C. 403-1(q)(C)) to require 
additional detail in annual reports currently required from the 
DNI for each major system acquisition by an element of the 
Intelligence Community.
    Among other items, the annual reports must include 
information about the current total acquisition cost for such 
system, the development schedule for the system including an 
estimate of annual development costs until development is 
completed, the planned procurement schedule for the system, 
including the best estimate of the DNI of the annual costs and 
units to be procured until procurement is completed, a full 
life-cycle cost analysis for such system, and the result of any 
significant test and evaluation of such major system as of the 
date of the submittal of such report.
    Section 311 includes definitions for ``acquisition cost,'' 
``full life-cycle cost,'' ``intelligence program,'' ``major 
contract,'' ``major system,'' and ``significant test and 
evaluation.''

Section 312. Vulnerability assessments of major system

    Section 312 adds a new oversight mechanism to the National 
Security Act of 1947 (50 U.S.C. 413 et seq.) that requires the 
DNI to conduct an initial vulnerability assessment and 
subsequent assessments of every major system and its 
significant items of supply in the National Intelligence 
Program (NIP). The intent of the provision is to provide 
Congress and the DNI with an accurate assessment of the unique 
vulnerabilities and risks associated with each NIP major system 
to allow a determination of whether funding for a particular 
major system should be modified or discontinued. The 
vulnerability assessment process will also require the various 
elements of the Intelligence Community responsible for 
implementing major systems to give due consideration to the 
risks and vulnerabilities associated with such implementation.
    Section 312 requires the DNI to conduct an initial 
vulnerability assessment on every major system and its 
significant items of supply proposed for the NIP prior to 
completion of Milestone B or an equivalent acquisition 
decision. The minimum requirements of the initial vulnerability 
assessment are fairly broad and intended to provide the DNI 
with significant flexibility in crafting an assessment tailored 
to the proposed major system. Thus, the DNI is required to use 
at a minimum, an analysis-based approach to identify 
vulnerabilities, define exploitation potential, examine the 
system's potential effectiveness, determine overall 
vulnerability, and make recommendations for risk reduction. The 
DNI is obviously free to adopt a more rigorous methodology for 
the conduct of initial vulnerability assessments.
    Vulnerability assessment should continue through the life 
of a major system and its significant items of supply. Numerous 
factors and considerations can affect the viability of a given 
major system. For that reason, Section 312 provides the DNI 
with the flexibility to set a schedule of subsequent 
vulnerability assessments for each major system when the DNI 
submits the initial vulnerability assessment to the 
congressional intelligence committees. The time period between 
assessments should depend upon the unique circumstances of a 
particular major system. For example, a new major system that 
is implementing some experimental technology might require 
annual assessments while a more mature major system might not 
need such frequent reassessment. The DNI is also permitted to 
adjust a major system's assessment schedule when the DNI 
determines that a change in circumstances warrants the issuance 
of a subsequent vulnerability assessment. Section 312 also 
provides that a congressional intelligence committee may 
request the DNI to conduct a subsequent vulnerability 
assessment of a major system.
    The minimum requirements for a subsequent vulnerability 
assessment are almost identical to those of an initial 
vulnerability assessment. There are only two additional 
requirements. First, if applicable to the given major system 
during its particular phase of development or production, the 
DNI must also use a testing-based approach to assess the 
system's vulnerabilities. Obviously, common sense needs to 
prevail here. For example, the testing approach is not intended 
to require the ``crash testing'' of a satellite system. Nor is 
it intended to require the DNI to test system hardware. 
However, the vulnerabilities of a satellite's significant items 
of supply might be exposed by a rigorous testing regime. 
Second, the subsequent vulnerability assessment is required to 
monitor the exploitation potential of the major system. Thus, a 
subsequent vulnerability assessment should monitor ongoing 
changes to vulnerabilities and understand the potential for 
exploitation. Since new vulnerabilities can become relevant and 
the characteristics of existing vulnerabilities can change, it 
is necessary to monitor both existing vulnerabilities and their 
characteristics, and to check for new vulnerabilities on a 
regular basis.
    Section 312 requires the DNI to give due consideration to 
the vulnerability assessments prepared for the major systems 
within the NIP. It also requires that the vulnerability 
assessments be provided to the congressional intelligence 
committees within ten days of their completion. The conferees 
encourage the DNI to also share the results of these 
vulnerabilities assessments, as appropriate, with other 
congressional committees of jurisdiction. Subsequent 
vulnerability assessments shall be provided to Congress with 
the DNI's annual report on major system acquisitions required 
under Section 102A(q) of the National Security Act of 1947.
    Finally, the section contains definitions for the terms 
``items of supply,'' ``major system,'' ``Milestone B,'' and 
``vulnerability assessment.''

Section 313. Intelligence community business system modernization

    One of the greatest challenges facing the IC today is the 
modernization of its business information systems. Guidance 
from the Office of Management and Budget has called for all 
business information systems in government organizations to 
become integrated into a business enterprise architecture. A 
business enterprise architecture incorporates an agency's 
financial, personnel, procurement, acquisition, logistics, and 
planning systems into one interoperable system. Currently, each 
IC element is building unique, stovepiped systems that do not 
leverage the investments of other elements of the IC. Section 
313 gives the DNI a structure for creating a coherent business 
enterprise architecture that will be useful for the 
intelligence professional, as well as cost-effective for the 
taxpayer. The Committee expects that the DNI will include 
Department of Defense representatives in the established forum 
as appropriate.
    Section 313 requires that the DNI create a business 
enterprise architecture that defines all IC business systems, 
as well as the functions and activities supported by those 
business systems, in order to guide with sufficient detail the 
implementation of interoperable IC business system solutions. 
Section 313 also requires the submission of a preliminary draft 
of the transition plan for implementing the business enterprise 
architecture. The business enterprise architecture and 
acquisition strategy are to be submitted to the congressional 
intelligence committees by March 1, 2009 for all financial 
management and human resources systems and by March 1, 2010, 
for all remaining Intelligence Community business systems.
    Section 313 will provide the congressional oversight 
committees the assurance that business systems that cost more 
than a million dollars and that receive more than 50 percent of 
their funding from the NIP will be efficiently and effectively 
coordinated. It will also provide a list of all ``legacy 
systems'' that will be either terminated or transitioned into 
the new architecture. Further, this section will require the 
DNI to report to the Committee no less often than annually, for 
five years, on the progress being made in successfully 
implementing the new architecture.

Section 314. Excessive cost growth of major systems

    Section 314 amends Title V of the National Security Act of 
1947 (50 U.S.C. 413 et seq.) to require that, in addition to 
the reporting required under Section 102A(q) of the Act, the 
program manager of a major system acquisition project shall 
determine on a continuing basis if the acquisition cost of such 
major system has increased by at least 25 percent as compared 
to the baseline of such major system. The program manager must 
inform the DNI of any such determination and the DNI must 
submit a written notification to the congressional intelligence 
committees if the DNI makes the same such determination.
    Section 314 is intended to mirror the Nunn-McCurdy 
provision in Title 10 of the United States Code that applies to 
major defense acquisition programs. The Committee envisions 
that the determination will be done as needed by the program 
manager of the major system acquisition and should not wait 
until the time that the DNI's annual report is filed. In other 
words, the Committee expects the congressional intelligence 
committees to be advised on a regular basis by the DNI about 
the progress and associated costs of major system acquisitions 
within the Intelligence Community.
    If the cost growth is 25 percent or more, the DNI must 
prepare a notification and submit, among other items, an 
updated cost estimate to the congressional intelligence 
committees, and a certification that the acquisition is 
essential to national security, there are no other alternatives 
that will provide equal or greater intelligence capability at 
equal or lesser cost to completion, the new estimates of the 
full life-cycle cost for such major system are reasonable, and 
the structure for the acquisition of such major system is 
adequate to manage and control full life-cycle cost of such 
major system.
    If the program manager makes a determination that the 
acquisition cost has increased by 50 percent or more as 
compared to the baseline, and the DNI makes the same such 
determination, then the DNI must submit a written certification 
to certify the same four items as described above, as well as 
an updated notification and accompanying information. In 
addition, if milestone authority had been delegated to the 
program manager, such authority is revoked and returned to the 
DNI, except that with respect to Department of Defense 
programs, such authority is revoked and returned to the 
Director and Secretary of Defense, jointly.
    If the required certification, at either the 25 percent or 
50 percent level, is not submitted to the congressional 
intelligence committees within 60 days of the DNI's 
determination of cost growth, Section 314 creates a mechanism 
in which funds cannot be obligated for a period of time. If 
Congress does not act during that period, then the acquisition 
may continue.

Section 315. Prohibition on conflicts of interest in intelligence 
        community contracting

    Section 315 prohibits, beginning in fiscal year 2010, the 
awarding of a contract for the provision of advisory and 
assistance services related to any major system acquisition 
with an element of the Intelligence Community to an entity 
whose business activities include the provision of products or 
services related to the same major system acquisition.
    This provision addresses a continuing concern of the 
Committee about apparent conflicts of interest within the 
intelligence acquisition community. Despite provisions in the 
Federal Acquisition Regulation intended to preclude such 
conflicts, the Committee is concerned that organizational 
conflicts of interest may adversely affect major acquisitions.
    The Executive branch is increasingly relying upon 
contractors to assist in managing or integrating complex 
acquisitions. Contractor advisory and assistance service (CAAS) 
and systems, engineering, and technical assistance (SETA) 
contracts are often used to perform what would otherwise be 
inherently governmental functions. There are merits to the 
government utilizing the technical and program management 
expertise that exists in the private sector. Close 
relationships, however, between CAAS/SETA contractors and their 
parent, affiliate, or subsidiary companies could bias those 
contractors in providing advice to the government.
    Where a program's prime contractor has a contractor 
affiliate working in the program office setting program 
requirements, assisting in source selections, and determining 
award and incentive fees for the same program, there is strong 
potential for conflicts of interest. An Inspector General 
report from an element of the Intelligence Community expressed 
concern about such apparent conflicts that were negatively 
impacting the interests of that particular element. Indeed, the 
Committee notes that several major prime contractors have 
corporate affiliates supporting government program offices in 
the management of major Intelligence Community acquisitions. 
The Committee believes this practice is undesirable and has 
adopted Section 315 to eliminate such conflicts of interest.
    Section 315 does not take effect until the beginning of 
fiscal year 2010. This transition period will allow existing 
CAAS/SETA contractors to make necessary adjustments to their 
corporate structures to avoid triggering a violation of Section 
315.

Section 316. Future budget projections

    Section 316 amends Title V of the National Security Act (50 
U.S.C. 413 et seq.) to require the DNI, with the concurrence of 
the Office of Management and Budget (OMB), to provide the 
congressional intelligence committees with two future budget 
projections that together span fifteen years and form the basis 
of affordability assessments required in this section and in 
Section 408 of the bill. Section 316 thus ensures that the 
Intelligence Community will make long-term budgetary 
projections that span the same time frame as the funding needs 
of programs it initiates in the budget.
    Section 316 requires first a Future Year Intelligence Plan 
for at least four years after the budget year, which includes 
the year by year funding plan for each expenditure center and 
for each major system in the NIP. Section 316 also requires 
lifecycle cost and milestones for major systems. Section 316 
also requires a Long-term Budget Projection ten years beyond 
the Future Year Intelligence Plan, but at a much higher level 
of budget aggregation. This Long-term Budget Projection is to 
be conducted under a constrained budget, but under two 
alternative sets of assumptions about cost growth--one with 
virtually no cost growth, the other more in line with 
experience. Section 316 requires that the Long-term Budget 
Projection includes a description of whether, and to what 
extent, the projection for each year for each element of the 
Intelligence Community exceeds the level that would result from 
applying the most recent Office of Management and Budget 
inflation estimate to that element. Both budget projections 
must be submitted to Congress with the President's budget 
request.
    Section 316 ensures that the Executive branch and Congress 
will be fully aware of the long-term budgetary impact of a 
major system acquisition prior to its development or 
production. This is achieved through a requirement that prior 
to a major system entering Milestone A and Milestone B or an 
analogous stage of system development, the DNI must report to 
the congressional intelligence committees whether and to what 
extent the proposed major system will increase the Future Year 
Intelligence Plan and the Long-term Budget Projection for that 
element of the IC. If the proposed major system is estimated to 
cause an increase to these future budget projections, then the 
DNI and OMB Director must issue a determination that the 
anticipated budget increase is necessary for national security.

        Subtitle C--Interrogation and Detention Related Matters


Section 321. Limitation on interrogation techniques

    Section 321 prohibits the use of any interrogation 
treatment or technique not authorized by the United States Army 
Field Manual on Human Intelligence Collector Operations (U.S. 
Army Field Manual) against any individual in the custody or 
effective control of any element of the Intelligence Community 
or any instrumentality of an element of the Intelligence 
Community. This limitation on interrogation conducted by 
Intelligence Community personnel is similar to the limitation 
on interrogation conducted by Department of Defense personnel 
in Section 1002(a) of the Detainee Treatment Act of 2005 (42 
U.S.C. 2000dd-0(a)).
    Section 321(a) was included in the conference report on the 
Intelligence Authorization Act for Fiscal Year 2008 that was 
vetoed by the President on March 8, 2008. The Committee has 
conducted extensive review of the legality, effectiveness, and 
appropriateness of CIA's detention and interrogation program. 
The congressional intelligence committees have held numerous 
hearings on interrogation-related issues, have had many 
additional member and staff briefings, and have solicited input 
from a variety of outside experts on both interrogation and the 
effects of current U.S. interrogation policy. The adoption of 
Section 321 through the amendment process at the Committee's 
mark-up reflects the Committee's belief that the CIA should not 
use interrogation techniques that go beyond those listed in the 
U.S. Army Field Manual.
    As updated in September of 2006, the U.S. Army Field Manual 
(FM 2-22.3) provides a detailed and unclassified description of 
the interrogation process, along with a number of interrogation 
approaches that can be used to elicit information from 
detainees. The U.S. Army Field Manual leaves interrogators with 
significant flexibility to determine what approaches will work 
in particular situations or with particular detainees; it does 
not mandate that particular interrogation approach strategies 
be used in any given situation. The Committee has received 
testimony that the approaches in the U.S. Army Field Manual are 
effective at eliciting information from detainees and that they 
can be appropriately tailored to all detainees, including 
senior terrorist leaders. The procedures in the U.S. Army Field 
Manual have also been extensively reviewed to ensure compliance 
with both ``American constitutional standards related to 
concepts of dignity, civilization, humanity, decency, and 
fundamental fairness,'' as well as U.S. obligations under 
international law, including the four Geneva Conventions of 
1949. See U.S. Army Field Manual at 5-21.
    In addition to describing interrogation approaches, the 
U.S. Army Field Manual includes a number of specific 
prohibitions. In particular, it prohibits ``acts of violence or 
intimidation, including physical or mental torture, or exposure 
to inhumane treatment as a means of or aid to interrogation.'' 
It also explicitly prohibits forcing a detainee to be naked, 
perform sexual acts, or pose in a sexual manner; placing hoods 
or sacks over the head of a detainee; using duct tape over the 
eyes of a detainee; applying beatings, electric shock, burns, 
or other forms of physical pain; waterboarding; using military 
working dogs; inducing hypothermia or heat injury; conducting 
mock executions; and depriving the detainee of necessary food, 
water, or medical care. Requiring the Intelligence Community to 
comply with the U.S. Army Field Manual thus prohibits the 
Intelligence Community's use of these actions as interrogation 
techniques.
    The Committee believes that the 19 techniques and 
approaches in the Manual are effective and appropriate, 
regardless of whether they are applied in a military or CIA 
context or whether the interrogated party is believed to have 
tactical or strategic intelligence value. The Committee intends 
that Section 321 binds the CIA to the interrogation approaches 
in the U.S. Army Field Manual, but does not bind the CIA to 
specific procedures required of the military that do not 
translate to the CIA context. For example, the U.S. Army Field 
Manual requires higher level approval for two of its authorized 
techniques: the ``False Flag'' approach requires approval at 
the O-6 level, ``Separation'' must be approved at the Combatant 
Commander level. The Committee does not intend for the CIA to 
seek or obtain approvals outside of the CIA chain of command 
for the use of such techniques.
    The Committee also considered and rejected the argument 
that restricting the CIA to the techniques listed in the U.S. 
Army Field Manual would provide detainees with ``the 
playbook.'' The Committee has received expert witness 
testimony, as well as testimony from the Directors of the 
Federal Bureau of Investigation and the Defense Intelligence 
Agency, that these interrogation techniques are effective 
despite being publicly available. Furthermore, the Committee 
believes that the public awareness of the CIA program and 
extensive speculation on what interrogation techniques may be 
authorized provides sufficient information, unfortunately, to 
potential detainees.
    The Committee concluded that the existence of a separate, 
secret CIA program yields significant damage to international 
perception of the United States. Section 321 therefore creates 
one consistent interrogation policy across both the U.S. 
military and the Intelligence Community. Any individual in the 
custody or under the effective control of an element of the 
Intelligence Community may therefore be subject only to those 
interrogation techniques authorized for use by the U.S. 
military, that is, the interrogation techniques authorized by 
the U.S. Army Field Manual.
    Section 321(b) defines ``instrumentality,'' with respect to 
an element of the Intelligence Community, to mean a contractor 
or subcontractor at any tier of the element of the Intelligence 
Community. This conforms to the definition of 
``instrumentality'' in Section 323 of the bill but is not 
intended to indicate any substantive difference to the 
definition of ``instrumentality'' found in the Intelligence 
Authorization Act for Fiscal Year 2008.

Section 322. Prohibition on interrogations by contractors

    Section 322 prohibits the use by the CIA of contractors in 
applying interrogation techniques to educe information. This 
prohibition is intended to apply any CIA interrogation, whether 
that program includes the use of so-called ``Enhanced 
Interrogation Techniques'' or is conducted under a modified 
program pursuant to Section 321.
    The CIA Director, General Michael Hayden, testified in an 
unclassified February 2008 Committee hearing that contractors 
are used as part of the CIA interrogation program. The 
Committee has done additional review into the use of 
contractors in this activity, to include the level of training 
and the backgrounds of the contractors employed, the legality 
of the use of contractors to perform the function, and the 
degree to which contractors are used to conduct interrogations 
instead of CIA personnel.
    By adoption of this section through the amendment process 
at the Committee's mark-up, the Committee determined that for 
reasons of accountability and control, CIA interrogations 
should be carried out by CIA staff officers, not by 
contractors.

Section 323. Notification of International Committee on the Red Cross

    Section 323 prohibits the use of funds authorized by this 
bill to detain any individual who is in the custody or under 
the effective control of an element of the intelligence 
community (or an instrumentality thereof) if the International 
Committee of the Red Cross (ICRC) is not provided, consistent 
with the practices of the Armed Forces of the United States, 
notification of the detention of such individual and access to 
such individual.
    The ICRC has been visiting detainees in connection with 
armed conflict since 1915. In 2006, the ICRC visited 478,000 
prisoners of war and detainees in more than 70 countries. 
Consistent with this role, Department of Defense Directive 
2310.01E clearly states that the ICRC ``shall be allowed to 
offer its services during an armed conflict, however 
characterized, to which the United States is a party.'' The 
Committee believes that U.S. armed forces have in place 
effective arrangements to provide the ICRC with notification 
and access to military detainees.
    The Committee understands that the Department of Defense 
arrangements establish certain key parameters regarding, among 
other things, the timeliness of the notification and the nature 
of the access. The Department of Defense arrangements allow for 
the collection of intelligence from detainees, while also 
acknowledging the special role established by international law 
for the ICRC to monitor compliance with the law of war. The 
Committee believes that such arrangements provide a workable 
framework for any individuals in the custody of a U.S. 
intelligence agency.
    The United States has long opposed incommunicado detention 
around the world as incompatible with our notions of liberty 
and justice. As recently as March 2008, the U.S. Department of 
State criticized the governments of North Korea, Burma, and Sri 
Lanka for engaging in ``disappearances'' in its 2007 Annual 
Human Rights Report. From time to time, the United States has 
found itself in need of obtaining access to U.S. personnel in 
the custody of another government or armed force. On the day 
after a collision between a U.S. military aircraft and a 
Chinese military aircraft (which forced the U.S. aircraft to 
make an emergency landing in Chinese territory), President 
George W. Bush said: ``The first step should be immediate 
access by our embassy personnel to our crew members. I am 
troubled by the lack of a timely Chinese response to our 
request for this access.'' Allowing ICRC access to individuals 
in U.S. custody would strengthen our ability to advocate for 
appropriate treatment of Americans detained overseas and 
restore our moral authority to press for respect for human 
rights around the world.
    Section 323(b) provides a rule of construction that 
clarifies that nothing in this section shall be construed to: 
(1) create or otherwise imply the authority to detain; or (2) 
limit or otherwise affect any other rights or obligations which 
may arise under the Geneva Conventions or other laws, or to 
state all of the situations in which notification to and access 
for the ICRC is required or allowed.
    Section 323(c) defines ``instrumentality'' for the purposes 
of this section to mean, with respect to an element of the 
intelligence community, a contractor or subcontractor at any 
tier of the element of the intelligence community.

Section 324. Report on compliance with the Detainee Treatment Act of 
        2005 and related provisions of the Military Commissions Act of 
        2006

    Section 324 requires the DNI to submit a classified 
comprehensive report to the congressional intelligence 
committees on all measures taken by the ODNI and by any IC 
element with relevant responsibilities on compliance with 
detention and interrogation provisions of the Detainee 
Treatment Act of 2005 and the Military Commissions Act of 2006. 
The report is to be submitted no later than 45 days after the 
date of enactment of this Act.
    The Detainee Treatment Act provides that no individual in 
the custody or under the physical control of the United States, 
regardless of nationality or physical location, shall be 
subject to cruel, inhuman, or degrading treatment. Congress 
reaffirmed this mandate in Section 6 of the Military 
Commissions Act, adding an implementation mechanism that 
requires the President to take action to ensure compliance 
including through administrative rules and procedures. Section 
6 further provides not only that grave breaches of Common 
Article 3 of the Geneva Conventions are war crimes under Title 
18 of the United State Code, but also that the President has 
authority for the United States to promulgate higher standards 
and administrative regulations for violations of U.S. treaty 
obligations. It requires the President to issue those 
interpretations by Executive Order published in the Federal 
Register.
    The report required by Section 324 shall include a 
description of any detention or interrogation methods that have 
been determined to comply with the prohibitions of the Detainee 
Treatment Act and the Military Commissions Act or have been 
discontinued pursuant to them.
    The Detainee Treatment Act also provides for the protection 
against civil or criminal liability for United States 
Government personnel who had engaged in officially authorized 
interrogations that were determined to be lawful at the time. 
Section 324 requires the DNI to report on actions taken to 
implement that provision.
    The report shall also include an appendix containing all 
guidelines on the application of the Detainee Treatment Act and 
the Military Commissions Act to the detention or interrogation 
activities, if any, of any IC element. The appendix shall also 
include all legal justifications of ``any office of the 
Department of Justice.'' This requirement is drafted so as to 
accommodate the concern that the provision might otherwise 
compel the production of internal deliberative legal materials. 
The provision therefore seeks only the legal justifications of 
any office of the Department of Justice that rendered an 
opinion on the matter.
    To the extent that the report required by Section 324 
addresses an element of the Intelligence Community within the 
Department of Defense, that portion of the report, and 
associated material that is necessary to make that portion 
understandable, shall also be submitted by the DNI to the 
congressional armed services committees.

                   Subtitle D--Reporting Requirements


Section 331. Report on use of contractors by elements of the 
        intelligence community

    Several provisions of the bill are aimed at reducing the 
overall use of contractors by the Intelligence Community. The 
Committee believes these provisions are necessary for financial 
and accountability purposes. Section 331 addresses the nature 
of the activities performed by contractors. The section 
requires a one-time report to the congressional intelligence 
committees by the DNI describing the activities within the 
Intelligence Community that the DNI believes should only be 
conducted by governmental employees but that are being 
conducted by one or more contractors, an estimate of the number 
of contractors performing each such activity, and the DNI's 
plans, if any, to have such activities performed solely by 
governmental employees.
    The Committee recognizes that there are activities that are 
more appropriately performed by contractors than government 
employees--installation and maintenance of information 
technology is a commonly cited example. The Committee also 
believes, however, that there are tasks that are ``inherently 
governmental,'' as that term is described in the Office of 
Management and Budget Circular A-76, that should be done solely 
by governmental employees. The Committee leaves it to the DNI's 
discretion to determine what those activities are, but believes 
that determining analytic judgments, collecting human 
intelligence, conducting covert action activities, performing 
interrogations, and managing personnel are among them.
    The Committee is hopeful that the reporting requirement in 
this section will lead to proposals by the DNI to transition 
contractor work to government positions, utilizing the 
authorities provided in Section 103(c) of this Act.

Section 332. Improvement of notification of Congress regarding 
        intelligence activities of the United States Government

    Section 332 amends the requirements for notifications to 
Congress under Sections 502 and 503 of the National Security 
Act of 1947 (50 U.S.C. 413a & 413b) and the requirements for 
funds to be authorized under Section 504 of that Act (50 U.S.C. 
414). First, Section 332 of the bill requires that, in the 
event that the DNI or the head of an Intelligence Community 
element does not provide to all members of the congressional 
intelligence committees the notification required by Section 
502 (relating to intelligence activities other than covert 
actions) or Section 503 (relating to covert actions) of the 
National Security Act of 1947, all members of the committees 
will be provided with a notification of this fact and will be 
provided with a description of the main features of the 
intelligence activity or covert action.
    Section 332 also extends requirements in Section 502 of the 
National Security Act of 1947 on the form and contents of 
reports to the congressional intelligence committees on 
intelligence activities other than covert actions to the 
requirements for notifications to Congress under Section 503 of 
that Act (relating to covert actions). In addition, the section 
requires that any change to a covert action finding under 
Section 503 of that Act must be reported to the committees, 
rather than the existing requirement to report changes only if 
they are ``significant.''

Section 333. Federal Bureau of Investigation intelligence 
        transformation

    Section 333 requires the Director of National Intelligence, 
in coordination with the Director of the Federal Bureau of 
Investigation, to establish performance metrics and specific 
timetables related to the progress of the FBI in carrying out 
nine items specified in the bill to make reforms within the 
Bureau.
    In addition, the DNI is required to submit to the 
congressional intelligence committees a consolidated report on 
a semi-annual basis over five years on the progress of the FBI 
in carrying out these items, including an assessment of the 
metrics, timetables and corrective actions, and a description 
of the activities being carried out to ensure the FBI is 
improving its performance.

Section 334. Incorporation of reporting requirements

    Section 334 incorporates into the Act each requirement to 
submit a report to the congressional intelligence committees 
contained in the classified annex to this Act.

Section 335. Repeal of certain reporting requirements

    The Committee frequently requests information from the 
Intelligence Community in the form of reports, the contents of 
which are specifically defined by statute. The reports prepared 
pursuant to these statutory requirements provide this Committee 
with an invaluable source of information about specific matters 
of concern.
    The Committee recognizes, however, that congressional 
reporting requirements, and particularly recurring reporting 
requirements, can place a significant burden on the resources 
of the Intelligence Community. It is therefore important for 
the Congress to reconsider these reporting requirements on a 
periodic basis to ensure that the reports it has requested are 
the best mechanism for the Congress to receive the information 
it seeks. In some cases, annual reports can be replaced with 
briefings or notifications that provide the Congress with more 
timely information and offer the Intelligence Community a 
direct line of communication to respond to congressional 
concerns.
    In response to a request from the Director of National 
Intelligence, the Committee examined some of these recurring 
reporting requirements. Section 335 therefore eliminates 
certain reports that were particularly burdensome to the 
Intelligence Community when the information in the reports 
could be obtained through other means. It also eliminates 
reports whose usefulness has diminished either because of 
changing events or because the information contained in those 
reports is duplicative of information already obtained through 
other avenues. It modifies the reporting requirements in three 
cases to change annual reports to biennial reports.
    Because the vast majority of recurring reports provide 
critical information relevant to the many challenges facing the 
Intelligence Community today, the Committee ultimately 
eliminated only six statutory reporting requirements, a very 
small percentage of the many recurring reports currently 
requested. The Committee believes that elimination of these 
reports will help the Intelligence Community to allocate its 
resources properly towards areas of greatest congressional 
concern.

                       Subtitle E--Other Matters


Section 341. Restriction on conduct of intelligence activities

    Section 341 provides that the authorization of 
appropriations by the Act shall not be deemed to constitute 
authority for the conduct of any intelligence activity that is 
not otherwise authorized by the Constitution or laws of the 
United States.

Section 342. Clarification of definition of intelligence community 
        under the National Security Act of 1947

    Section 342 amends Section 3(4)(L) of the National Security 
Act of 1947 (50 U.S.C. 401a(4)(L)) to permit the designation as 
``elements of the intelligence community'' of elements of 
departments and agencies of the United States Government 
whether or not those departments and agencies are listed in 
Section 3(4).

Section 343. Modification of availability of funds for different 
        intelligence activities

    Section 343 conforms the text of Section 504(a)(3)(B) of 
the National Security Act of 1947 (50 U.S.C. 414(a)(3)(B) 
(governing the funding of intelligence activities)) with the 
text of Section 102A(d)(5)(A)(ii) of that Act (50 U.S.C. 403-
1(d)(5)(A)(ii)), as amended by Section 1011(a) of the 
Intelligence Reform and Terrorism Prevention Act of 2004 (Pub. 
L. No. 108-458 (Dec. 17, 2004)) (governing the transfer and 
reprogramming by the DNI of certain intelligence funding).
    The amendment replaces the ``unforeseen requirements'' 
standard in Section 504(a)(3)(B) with a more flexible standard 
to govern reprogrammings and transfers of funds authorized for 
a different intelligence or intelligence-related activity. 
Under the new standard, a reprogramming or transfer is 
authorized if, in addition to the other requirements of Section 
504(a)(3), the new use of funds would ``support an emergent 
need, improve program effectiveness, or increase efficiency.'' 
This modification brings the standard for reprogrammings or 
transfers of intelligence funding into conformity with the 
standards applicable to reprogrammings and transfers under 
Section 102A of the National Security Act of 1947. The 
modification preserves congressional oversight of proposed 
reprogrammings and transfers while enhancing the IC's ability 
to carry out missions and functions vital to national security.

Section 344. Additional limitation on availability of funds for 
        intelligence and intelligence-related activities

    Section 344 adds to the requirements of Section 504 of the 
National Security Act of 1947, which specify that appropriated 
funds may be obligated or expended for an intelligence or 
intelligence-related activity only if the congressional 
intelligence committees have been ``fully and currently 
informed'' of that activity. Section 344 specifies that the 
committees should be considered to have been `fully and 
currently informed' only if all members of the committees are 
fully informed or if all members have received a notification 
providing the main features of the activity or covert action 
has been provided as required elsewhere in this section.

Section 345. Limitation on reprogramming and transfer of funds

    Section 345 modifies the reprogramming requirements set 
forth in Section 504 of the National Security Act of 1947 (50 
U.S.C. 414) to provide in statute that, following a 
reprogramming notification from the DNI, Attorney General, or 
Secretary of Defense, appropriated funds may not be expended 
for a period of up to 90 days after a request for information 
about the reprogramming is made by one of the congressional 
intelligence committees. It also allows the President to 
authorize the reprogramming, regardless of the 90-day review 
period, to fulfill an urgent operational requirement (excluding 
cost overruns) when it is necessary for the Intelligence 
Community to carry out the reprogrammed activity prior to the 
completion of the review period set by the congressional 
intelligence committees.
    Section 504 of the National Security Act allows the 
Intelligence Community a certain degree of flexibility in 
reprogramming authorized and appropriated funds for higher 
priority activities based on unforeseen requirements without 
having to seek additional legislation from Congress. Section 
345 of the bill alters this delegation of authority to 
reprogram and transfer funds by formalizing a maximum time 
period for review by the congressional intelligence committees 
and instituting a waiver mechanism to ensure that such review 
does not hamper urgent operational requirements.

Section 346. Availability to public of certain intelligence funding 
        information

    Section 601(a) of the Implementing Recommendations of the 
9/11 Commission Act of 2007 (50 U.S.C. 415c (August 3, 2007)) 
requires the DNI to disclose the aggregate amount of funds 
appropriated by Congress for the NIP for each fiscal year 
beginning with fiscal year 2007. Section 601(b) provides that 
the President may waive or postpone such disclosure if certain 
conditions are met, beginning with fiscal year 2009. Section 
346 changes the year for which the waiver is first available to 
fiscal year 2010.

Section 347. Increase in penalties for disclosure of undercover 
        intelligence officers and agents

    Section 347 amends Section 601 of the National Security Act 
of 1947 (50 U.S.C. 421) to increase the criminal penalties 
involving the disclosure of the identities of undercover 
intelligence officers and agents.
    Section 347(a) amends Section 601(a) to increase criminal 
penalties for individuals with authorized access to classified 
information who intentionally disclose any information 
identifying a covert agent, if those individuals know that the 
United States is taking affirmative measures to conceal the 
covert agent's intelligence relationship to the United States. 
Currently, the maximum sentence for disclosure by someone who 
has had ``authorized access to classified information that 
identifies a covert agent'' is 10 years. Subsection (a) of 
Section 347 of this Act increases that maximum sentence to 15 
years.
    Currently, under Section 601(b) of the National Security 
Act of 1947, the maximum sentence for disclosure by someone who 
``as a result of having authorized access to classified 
information, learns of the identity of a covert agent'' is 5 
years. Subsection (b) of Section 347 of this Act increases that 
maximum sentence to 10 years.

Section 348. Authority to designate undercover operations to collect 
        foreign intelligence or counterintelligence

    Various provisions in the United States Code preclude the 
government from conducting the following activities: the 
deposit of funds in a financial institution; the lease or 
purchase of real property; the establishment and operation of a 
proprietary business on a commercial basis; and the utilization 
of proceeds of the operation to offset necessary and reasonable 
operational expenses. In recognition, however, of the important 
role such activities may play in the conduct of undercover 
operations, Public Law 102-395 (28 U.S.C. 533 note) provides a 
mechanism for the FBI to obtain an exemption from these 
otherwise applicable laws.
    Under Public Law 102-395, an exemption may be obtained if 
the proposed activity is certified by the Director of the 
Federal Bureau of Investigation and the Attorney General as 
being necessary to the conduct of the undercover operation. For 
national security investigations, the Director of the FBI may 
delegate certifying authority to an Assistant Director in the 
Counterterrorism, Counterintelligence, or Cyber Divisions at 
the FBI, and the Attorney General may delegate such authority 
to the Assistant Attorney General for the National Security 
Division at the Department of Justice.
    Section 348 amends the current delegation level for both 
the FBI and the Department of Justice. It allows the FBI 
Director to delegate certifying authority to a level not lower 
than a Deputy Assistant Director in the National Security 
Branch. It also allows the Attorney General to delegate the 
certifying authority to a level not lower than a Deputy 
Assistant Attorney General in the National Security Division. 
It should be noted that this delegation level for the 
Department of Justice remains at a higher level than that which 
is currently required in criminal undercover operations.
    The Committee is concerned that, because of both statutory 
and administrative limitations, the current delegation levels 
are insufficient to allow for timely processing of undercover 
exemptions. The success and safety of undercover operations can 
depend in part on the ability to do such simple tasks as open a 
bank account or rent an apartment for cover purposes. While the 
creation of the National Security Division at the Department of 
Justice has led to more efficient processing of some exemption 
requests, there remains room for improvement. The Committee 
believes that the new delegation levels established in this 
Section will encourage and facilitate further internal and 
administrative improvements in processing undercover exemptions 
both at the FBI and the Department of Justice, without 
sacrificing needed oversight within the FBI and Department of 
Justice.

Section 349. Language and intelligence analyst training program

    Section 922 of the Ronald W. Reagan National Defense 
Authorization Act for Fiscal Year 2005 (Pub. L. No. 108-375) 
authorized the creation of a pilot program to provide 
scholarships to prospective language and intelligence analysts. 
This program was modeled after the military's Reserve Officer 
Training Corps and administered by the Director of the National 
Security Agency. The Committee believes that the results of 
this pilot program thus far have been encouraging.
    Section 349 makes the authorization for this program 
permanent, and transfers authority to administer the program to 
the Director of National Intelligence. Section 349 also expands 
the program's scope by authorizing the DNI to award grants to 
qualified institutions of higher education to develop relevant 
courses of study, and provides greater legislative clarity 
regarding the operation of the program.

Section 350. Extension of authority to delete information about receipt 
        and disposition of foreign gifts and decorations

    Current law (5 U.S.C. 7342) requires that certain federal 
``employees''--a term that generally applies to all IC 
officials and personnel and certain contractors, spouses, 
dependents, and others--file reports with their employing 
agency regarding receipt of gifts or decorations from foreign 
governments. Following compilation of these reports, the 
employing agency is required to file annually with the 
Secretary of State detailed information about the receipt of 
foreign gifts and decorations by its employees, including the 
source of the gift. The Secretary of State is required to 
publish a comprehensive list of the agency reports in the 
Federal Register.
    With respect to IC activities, public disclosure of gifts 
or decorations in the Federal Register has the potential to 
compromise intelligence sources (e.g., confirmation of an 
intelligence relationship with a foreign government) and could 
undermine national security. Recognizing this concern, the 
Director of Central Intelligence (DCI) was granted a limited 
exemption from reporting certain information about such foreign 
gifts or decorations where the publication of the information 
could adversely affect United States intelligence sources. 
Section 1079 of the Intelligence Reform and Terrorism 
Prevention Act of 2004, Pub. L. No. 108-458 (December 17, 2004) 
(``Intelligence Reform Act''), extended a similar exemption to 
the DNI in addition to applying the existing exemption to the 
CIA Director.
    Section 350 provides to the heads of each IC element the 
same limited exemption from specified public reporting 
requirements that is currently authorized for the DNI and CIA 
Director. The national security concerns that prompt those 
exemptions apply equally to other IC elements. Section 350 
mandates that the information not provided to the Secretary of 
State be provided to the DNI, who is required to keep a record 
of such information, to ensure continued independent oversight 
of the receipt by IC personnel of foreign gifts or decorations.
    Gifts received in the course of ordinary contact between 
senior officials of elements of the Intelligence Community and 
their foreign counterparts should not be excluded under the 
provisions of Section 350 unless there is a serious concern 
that such contacts and gifts would adversely affect United 
States intelligence sources or methods.

Section 351. Extension of National Commission for the Review of 
        Research and Development Programs of the United States 
        Intelligence Community

    The National Commission for Review of Research and 
Development Programs of the United States Intelligence 
Community was authorized in the Intelligence Authorization Act 
for Fiscal Year 2003 (Pub. L. No. 107-306), and lapsed on 
September 1, 2004. Section 501 renews authority for this 
Commission by extending the reporting deadline to December 31, 
2009, and requiring that new members be appointed to the 
Commission. This section also authorizes funds for the 
commission from the Intelligence Community Management Account.

Section 352. Clarifying amendments relating to section 105 of the 
        Intelligence Authorization Act for Fiscal Year 2004

    Section 352 changes the reference to the Director of 
Central Intelligence to the Director of National Intelligence 
in Section 105 of the Intelligence Authorization Act for Fiscal 
Year 2004 (Pub. L. No. 108-77 (December 13, 2003)) to clarify 
that the establishment of the Office of Intelligence and 
Analysis within the Department of the Treasury, and its 
reorganization within the Office of Terrorism and Financial 
Intelligence (Section 222 of the Transportation, Treasury, 
Independent Agencies, and General Government Appropriations 
Act, 2005 (Division H, Pub. L. No. 108-447 (December 8, 2004)), 
do not affect the authorities and responsibilities of the DNI 
with respect to the Office of Intelligence and Analysis as an 
element of the Intelligence Community.

  TITLE IV--MATTERS RELATING TO ELEMENTS OF THE INTELLIGENCE COMMUNITY


      Subtitle A--Office of the Director of National Intelligence


Section 401. Requirements for accountability reviews by the Director of 
        National Intelligence

    Section 401 provides that the Director of National 
Intelligence shall have new authority to conduct accountability 
reviews of elements within the Intelligence Community and the 
personnel of those elements. The primary innovation of this 
provision is the authority to conduct accountability reviews 
concerning an entire element of the IC in relation to failures 
or deficiencies.
    This accountability process is intended to be separate and 
distinct from any accountability reviews being conducted 
internally by the elements of the Intelligence Community or 
their Inspectors General, and is not intended to limit the 
authorities of the Director of National Intelligence with 
respect to his supervision of the Central Intelligence Agency.
    Section 401 requires that the Director of National 
Intelligence, in consultation with the Attorney General, must 
formulate guidelines and procedures that will govern 
accountability reviews. The Committee envisions that these 
guidelines will govern the process by which the Director of 
National Intelligence can collect sufficient information from 
the Intelligence Community to assess accountability for a given 
incident.
    Any findings and recommendations for corrective or punitive 
action made by the Director of National Intelligence shall be 
provided to the head of the applicable element of the 
Intelligence Community. If the head of such element does not 
implement the recommendations, then the congressional 
intelligence committees must be notified and provided the 
reasons for the determination by the head of the element.
    In addition, to avoid a construction that a committee of 
Congress on its own could require such a review over the 
objection of the DNI, a concern raised by the ODNI, the section 
makes clear that the DNI shall conduct a review if the DNI 
determines it is necessary, and the DNI may conduct an 
accountability review (but is not statutorily required to do 
so) if requested by one of the congressional intelligence 
committees.
    This enhancement to the authority of the Director of 
National Intelligence is warranted given the apparent 
reluctance of various elements of the Intelligence Community to 
hold their agencies or personnel accountable for significant 
failures or deficiencies. Recent history provides several 
examples of serious failures to adhere to sound analytic 
tradecraft. In its reviews of both the September 11, 2001 
terrorist attacks and the faulty Iraq prewar assessments on 
weapons of mass destruction, the Committee found specific 
examples of these failures yet no one within the Intelligence 
Community has been held accountable. Other examples of a lack 
of accountability within the Intelligence Community can be 
found by examining the history of certain major system 
acquisition programs. Despite clear management failures that 
resulted in significant cost overruns and unreasonable 
scheduling delays, these programs continue to stumble along 
without any imposition of accountability.
    The Committee hopes that this modest increase in the 
Director of National Intelligence's authorities will encourage 
elements within the Intelligence Community to put their houses 
in order by imposing accountability for significant failures 
and deficiencies. Section 401 will enable the Director of 
National Intelligence to get involved in the accountability 
process in the event that an element of the Intelligence 
Community cannot or will not take appropriate action.

Section 402. Authorities for intelligence information sharing

    Section 402 amends Section 102A(g)(1) of the National 
Security Act of 1947 (50 U.S.C. 403-1(g)(1)) to provide the DNI 
statutory authority to use NIP funds to quickly address 
deficiencies or needs that arise in intelligence information 
access or sharing capabilities.
    The new Section 102A(g)(1)(G) authorizes the DNI to provide 
to a receiving agency or component, and for that agency or 
component to accept and use, funds or systems (which would 
include services or equipment) related to the collection, 
processing, analysis, exploitation, and dissemination of 
intelligence information.
    The new Section 102A(g)(1)(H) grants the DNI authority to 
provide funds to non-NIP activities for the purpose of 
addressing critical gaps in intelligence information access or 
sharing capabilities. Without this authority, development and 
implementation of necessary capabilities could be delayed by an 
agency's lack of authority to accept or utilize systems funded 
from the NIP, inability to use or identify current-year 
funding, or concerns regarding the augmentation of 
appropriations.
    These are similar to authorities granted to the National 
Geospatial-Intelligence Agency (NGA) for developing and 
fielding systems of common concern relating to imagery 
intelligence and geospatial intelligence. See Section 
105(b)(2)(D)(ii) of the National Security Act of 1947 (50 
U.S.C. 403-5). Section 402 also requires the DNI to submit a 
report to the congressional intelligence committees by February 
1st annually from fiscal year 2010 through fiscal year 2013 
providing details on how this authority has been exercised 
during the preceding fiscal year.

Section 403. Modification of limitation on delegation by the Director 
        of National Intelligence of the protection of intelligence 
        sources and methods

    Section 403 amends Section 102A(i)(3) of the National 
Security Act of 1947 to modify the limitation on delegation by 
the DNI (which now extends only to the Principal Deputy DNI) of 
the authority to protect intelligence sources and methods from 
unauthorized disclosure. It permits the DNI to delegate the 
authority to the Principal Deputy DNI or the Chief Information 
Officer of the IC.

Section 404. Authorities of the Director of National Intelligence for 
        interagency funding

    The DNI should be able to rapidly focus the IC on an 
intelligence issue through a coordinated effort that uses all 
available resources. The ability to coordinate the IC response 
to an emerging threat should not depend on the budget cycle and 
should not be constrained by general limitations in 
appropriations law (e.g., 31 U.S.C. 1346) or other prohibitions 
on interagency financing of boards, commissions, councils, 
committees, or similar groups.
    To provide this flexibility, Section 404 grants the DNI the 
authority to approve interagency financing of national 
intelligence centers established under Section 119B of the 
National Security Act of 1947 (50 U.S.C. 404o-2). The section 
also authorizes interagency funding for boards, commissions, 
councils, committees, or similar groups established by the DNI 
for a period not to exceed two years. This would include the 
interagency funding of IC mission managers. Under Section 404, 
the DNI could authorize the pooling of resources from various 
IC agencies to finance national intelligence centers or other 
organizational groupings designed to address identified 
intelligence matters. The provision also expressly permits IC 
elements, upon the request of the DNI, to fund or participate 
in these interagency activities.
    Under Section 404, the DNI is to submit a report to the 
congressional intelligence committees by February 1st annually 
from fiscal year 2010 through fiscal year 2013 providing 
details on how this authority has been exercised during the 
preceding fiscal year.

Section 405. Clarification of limitation on co-location of the Office 
        of the Director of National Intelligence

    Section 405 clarifies that the ban on co-location of the 
Office of the DNI with any other IC element, which is slated to 
take effect on October 1, 2008, applies to the co-location of 
the headquarters of the Office of the DNI with the headquarters 
of any other Intelligence Community agency or element.
    In his legislative request for this authorization, the DNI 
has asked, for the first time, that Congress also provide that 
``The headquarters of the Office of the Director of National 
Intelligence may be located in the District of Columbia or 
elsewhere in the Metropolitan Region, as that term is defined 
in Section 8301 of title 40, United States Code.'' The purpose 
of this request is to provide statutory authorization for the 
location of the ODNI outside of the District of Columbia.
    Section 72 of Title 4, United States Code--a codification 
enacted in 1947 which derived from a statute signed into law by 
President George Washington in 1790--requires that ``All 
offices attached to the seat of government shall be exercised 
in the District of Columbia and not elsewhere, except as 
otherwise expressly provided by law.'' In 1955, just eight 
years after the 1947 codification, Congress granted statutory 
authority for the Director of Central Intelligence to provide 
for a headquarters of the Central Intelligence Agency either in 
the District of Columbia ``or elsewhere.'' 69 Stat. 324, 349.
    The DNI, in his sectional analysis accompanying his request 
for this authorization, states that whether a statutory 
exemption (such as the one provided to the CIA) is needed ``is 
unclear.'' To aid the Congress in determining--in light of the 
text of 4 U.S.C. 72, and the precedent of the 1955 legislation 
on the location of the CIA--whether an exemption is required 
for the location of the ODNI outside the District of Columbia, 
the Committee requests that the DNI obtain the legal opinion of 
the Department of Justice's Office of Legal Counsel on that 
question. If legislation is required, the policy question about 
the location of the ODNI can then be addressed in a floor 
amendment to this authorization.

Section 406. Title of Chief Information Officer of the Intelligence 
        Community

    Section 406 expressly designates the position of Chief 
Information Officer in the Office of the Director of National 
Intelligence as Chief Information Officer of the Intelligence 
Community. The modification to this title is consistent with 
the position's overall responsibilities as outlined in Section 
103G of the National Security Act of 1947 (50 U.S.C. 403-3g).

Section 407. Inspector General of the Intelligence Community

    Section 1078 of the Intelligence Reform Act authorizes the 
DNI to establish an Office of Inspector General if the DNI 
determines that an Inspector General (IG) would be beneficial 
to improving the operations and effectiveness of the Office of 
the DNI. It further provides that the DNI may grant to the 
Inspector General any of the duties, responsibilities, and 
authorities set forth in the Inspector General Act of 1978. The 
DNI has appointed an Inspector General and has granted certain 
authorities pursuant to DNI Instruction No. 2005-10 (September 
7, 2005).
    As this Committee urged in reports on proposed 
authorization acts for fiscal years 2006 through 2008, a strong 
IG is vital to achieving the goal, set forth in the 
Intelligence Reform Act, of improving the operations and 
effectiveness of the Intelligence Community. It is also vital 
to achieving the broader goal of identifying problems and 
deficiencies, wherever they may be found in the IC, with 
respect to matters within the responsibility and authority of 
the DNI, including the manner in which elements of the IC 
interact with each other in providing access to information and 
undertaking joint or cooperative activities. By way of a new 
Section 103H of the National Security Act of 1947, Section 407 
of this Act establishes an Inspector General of the 
Intelligence Community in order to provide to the DNI and 
through reports to the Congress, the benefits of an IG with 
full statutory authorities and the requisite independence.
    The Office of the Inspector General is to be established 
within the Office of the DNI. The Office of the IG created by 
this bill is to replace and not duplicate the current Office of 
the IG for the ODNI. The IG will keep both the DNI and the 
congressional intelligence committees fully and currently 
informed about problems and deficiencies in IC programs and 
operations and the need for corrective actions. The IG will be 
appointed by the President, with the advice and consent of the 
Senate, and will report directly to the DNI. To bolster the 
IG's independence within the Intelligence Community, the IG may 
be removed only by the President, who must communicate the 
reasons for the removal to the congressional intelligence 
committees.
    Under the new subsection 103H(e), the DNI may prohibit the 
IG from conducting an investigation, inspection, or audit if 
the DNI determines that is necessary to protect vital national 
security interests. If the DNI exercises the authority to 
prohibit an investigation, the DNI must provide the reasons to 
the intelligence committees within seven days. The IG may 
submit comments in response to the congressional intelligence 
committees.
    The IG will have direct and prompt access to the DNI and 
any IC employee, or employee of a contractor, whose testimony 
is needed. The IG will also have direct access to all records 
that relate to programs and activities for which the IG has 
responsibility. Failure to cooperate will be grounds for 
appropriate administrative action.
    The IG will have subpoena authority. However, information 
within the possession of the United States Government must be 
obtained through other procedures. Subject to the DNI's 
concurrence, the IG may request information from any United 
States Government department, agency, or element. They must 
provide the information to the IG insofar as is practicable and 
not in violation of law or regulation.
    The IG must submit semiannual reports to the DNI that 
include a description of significant problems relating to IC 
programs and operations and to the relationships between IC 
elements. The reports must include a description of IG 
recommendations and a statement whether corrective action has 
been completed. Within 30 days of receiving each semiannual 
report from the IG, the DNI must submit it to Congress.
    The IG must immediately report to the DNI particularly 
serious or flagrant violations. Within seven days, the DNI must 
transmit those reports to the intelligence committees together 
with any comments. In the event the IG is unable to resolve any 
differences with the DNI affecting the duties or 
responsibilities of the IG or the IG conducts on investigation, 
inspection, or audit that focuses on certain high-ranking 
officials, the IG is authorized to report directly to the 
intelligence committees.
    IC employees, or employees of contractors, who intend to 
report to Congress an ``urgent concern''--such as a violation 
of law or Executive order, a false statement to Congress, or a 
willful withholding from Congress--may report such complaints 
and supporting information to the IG. Following a review by the 
IG to determine the credibility of the complaint or 
information, the IG must transmit such complaint and 
information to the DNI. On receiving the complaints or 
information from the IG (together with the IG's credibility 
determination), the DNI must transmit the complaint or 
information to the intelligence committees. If the IG finds a 
complaint or information not to be credible, the reporting 
individual may still submit the matter directly to the 
committees by following appropriate security practices outlined 
by the DNI. Reprisals or threats of reprisal against reporting 
individuals constitute reportable ``urgent concerns.'' The 
Committee will not tolerate actions by the DNI, or by any IC 
element, constituting a reprisal for reporting an ``urgent 
concern'' or any other matter to Congress. Nonetheless, 
reporting individuals should ensure that the complaint and 
supporting information are provided to Congress consistent with 
appropriate procedures designed to protect intelligence sources 
and methods and other sensitive matters.
    For matters within the jurisdiction of both the IG of the 
Intelligence Community and an Inspector General for another IC 
element (or for a parent department or agency), the Inspectors 
General shall expeditiously resolve who will undertake the 
investigation, inspection, or audit. In attempting to resolve 
that question, the Inspectors General may request the 
assistance of the Intelligence Community Inspectors General 
Forum (a presently functioning body whose existence is ratified 
by Section 407). In the event that the Inspectors General are 
still unable to resolve the question, they shall submit it to 
the DNI and the head of the agency or department for 
resolution.
    An IG for an IC element must share the results of any 
investigation, inspection, or audit with any other IG, 
including the Inspector General of the Intelligence Community, 
who otherwise would have had jurisdiction over the 
investigation, inspection, or audit.
    Consistent with existing law, the Inspector General must 
report to the Attorney General any information, allegation, or 
complaint received by the Inspector General relating to 
violations of Federal criminal law.

Section 408. Chief Financial Officer of the Intelligence Community

    Section 408 amends Title I of the National Security Act of 
1947 (50 U.S.C. 402 et seq.) to establish in statute a Chief 
Financial Officer of the Intelligence Community (IC CFO) to 
assist the DNI in carrying out budgetary, acquisition, and 
financial management responsibilities.
    By way of a new Section 103I of the National Security Act 
of 1947, under Section 408, the IC CFO will, to the extent 
applicable, have the duties, responsibilities, and authorities 
specified in the Chief Financial Officers Act of 1990. The IC 
CFO will serve as the principal advisor to the DNI and the 
Principal Deputy DNI on the management and allocation of IC 
budgetary resources, and shall establish and oversee a 
comprehensive and integrated strategic process for resource 
management within the IC. Section 408 charges the IC CFO with 
ensuring that the strategic plan and architectures of the DNI 
are based on budgetary constraints as specified in the future 
budget projections required in Section 316.
    Section 408 also charges the IC CFO with ensuring that 
major system acquisitions satisfy validated national 
requirements for meeting the DNI's strategic plans and that 
such requirements are prioritized based on budgetary 
constraints as specified in the future budget projections 
required in Section 316. To guarantee this is achieved in 
practice, under Section 408, prior to obligation or expenditure 
of funds for major system acquisitions to proceed to Milestone 
A (development) or Milestone B (production), requirements must 
validated and prioritized based on budgetary constraints as 
specified in Section 316.
    Section 408 requires that the IC CFO preside, or assist in 
presiding, over any mission requirement, architectural, or 
acquisition board formed by the ODNI, and to coordinate and 
approve representations to Congress by the IC regarding NIP 
budgetary resources. An individual serving as the IC CFO may 
not at the same time also serve as a CFO of any other 
department or agency.

Section 409. Leadership and location of certain offices and officials

    Section 409 confirms in statute that various offices are 
within the Office of the DNI: (1) the Chief Information Officer 
of the Intelligence Community; (2) the Inspector General of the 
Intelligence Community; (3) the Director of the National 
Counterterrorism Center (NCTC); (4) the Director of the 
National Counter Proliferation Center (NCPC); and (5) the Chief 
Financial Officer of the Intelligence Community. It also 
expressly provides in statute that the DNI shall appoint the 
Director of the NCPC, which is what has been done by 
administrative delegation from the President.

Section 410. National Space Intelligence Office

    The United States maintains a large investment in 
satellites and this investment has grown dramatically in recent 
years. These satellites serve the commercial and national 
security needs of the nation. As such, a loss of any or all of 
these assets would do tremendous harm to our economy and 
security.
    At the same time, our investment in intelligence collection 
concerning threats to our interests in space has declined 
markedly in relation to our overall investment in space 
systems. Despite this significant overall investment, some 
estimates indicate that we commit only 10 percent of what we 
did nearly 25 years ago to the analysis of threats to space 
systems. Recent international events have only served to 
highlight this problem.
    In an effort to better understand future threats to our 
space assets, as well as potential threats to the United States 
from space, Section 410 establishes a National Space 
Intelligence Office (NSIO). It is not the intent of the 
Committee that the NSIO be a physical consolidation of existing 
intelligence entities with responsibilities for various types 
of intelligence related to space. Rather, the functions of the 
NSIO, among others delineated in Section 410, will be to 
coordinate and provide policy direction for the management of 
space-related intelligence assets as well as to prioritize 
collection activities consistent with the DNI's National 
Intelligence Collection Priorities. The NSIO is to augment the 
existing efforts of the National Air and Space Intelligence 
Center (NASIC) and Missile and Space Intelligence Center 
(MSIC); it is not designed to replace them. The Committee 
intends that NSIO work closely with NASIC and MSIC to ensure a 
coordinated IC response to issues that intersect the 
responsibilities of all three organizations.
    The NSIO Director shall be the National Intelligence 
Officer for Science and Technology. The Committee encourages 
appointment of an Executive Director from the Senior 
Intelligence Service.

Section 411. Operational files in the Office of the Director of 
        National Intelligence

    In the CIA Information Act (Pub. L. No. 98-477 (October 15, 
1984) (50 U.S.C. 431 et seq.)), Congress authorized the DCI to 
exempt operational files of the CIA from several requirements 
of the Freedom of Information Act (FOIA), particularly those 
requiring search and review in response to FOIA requests. In a 
series of amendments to Title VII of the National Security Act 
of 1947, Congress has extended the exemption to the operational 
files of the National Geo-Spatial Intelligence Agency (NGA), 
the National Security Agency (NSA), the National Reconnaissance 
Office (NRO), and the Defense Intelligence Agency (DIA). It has 
also provided that files of the Office of the National 
Counterintelligence Executive (NCIX) should be treated as 
operational files of the CIA (to the extent they meet the 
criteria for CIA operational files).
    Section 411 adds a new Section 706 to the National Security 
Act of 1947. Components of the ODNI, including the NCTC, 
require access to information contained in CIA and other 
operational files. The purpose of Section 411 is to make clear 
that the operational files of any IC component, for which an 
operational files exemption is applicable, retain their 
exemption from FOIA search, review, disclosure, or publication. 
They also retain their exemption when they are incorporated in 
any substantially similar files of the ODNI.
    Section 411 provides several limitations. The exemption 
does not apply to information disseminated beyond the ODNI. 
Also, as Congress has provided in the operational files 
exemptions for the CIA and other IC elements, Section 411 
provides that the exemption from search and review does not 
apply to requests by United States citizens or permanent 
residents for information about themselves (although other FOIA 
exemptions, such as appropriate classification, may continue to 
protect such files from public disclosure). The search and 
review exemption would not apply to the subject matter of 
congressional or Executive branch investigations into 
improprieties or violations of law.
    Section 411 also provides for a decennial review by the DNI 
to determine whether exemptions may be removed from any 
category of exempted files. It provides that this review shall 
include consideration of the historical value or other public 
interest in the subject matter of those categories and the 
potential for declassifying a significant part of the 
information contained in them. The Committee underscores the 
importance of this requirement, which applies to the other 
operational exemptions in Title VII, and also reiterates its 
interest in being advised by the DNI about the benefits of 
coordinating the five decennial reviews presently required by 
Title VII.

Section 412. Membership of the Director of National Intelligence on the 
        Transportation Security Oversight Board

    Section 412 substitutes the DNI, or the DNI's designee, as 
a member of the Transportation Security Oversight Board 
established under Section 115(b)(1) of Title 49, United States 
Code, in place of the CIA Director or CIA Director's designee.

Section 413. Director of National Intelligence report on retirement 
        benefits for former employees of Air America

    Section 413 provides for a report by the DNI on the 
advisability of providing federal retirement benefits to United 
States citizens who were employees of Air America or an 
associated company prior to 1977, during the time that the 
company was owned or controlled by the United States and 
operated by the CIA.
    There were bills in the Senate and House (S. 651 and H.R. 
1276 during the 109th Congress and H.R. 1271 in the 110th 
Congress) that would have provided federal retirement benefits 
for those employees. By including Section 413 in this 
authorization bill, the Committee takes no position on the 
merits of that legislation.
    Although the section invites the DNI to submit any 
recommendations on the ultimate question of providing benefits, 
the main purpose of the report is to provide Congress with the 
facts upon which Congress can make that determination. 
Accordingly, Section 413 outlines the factual elements required 
by the report. To aid in the preparation of the report, the 
section authorizes the assistance of the Comptroller General. 
Among the elements of the report should be: the relationship of 
Air America to the CIA, the missions it performed, and the 
casualties its employees suffered, as well as the retirement 
benefits that had been contracted for or promised to Air 
America employees and the retirement benefits Air America 
employees received.
    On September 25, 2007, the CIA provided a three page letter 
to the congressional intelligence and appropriations committees 
in response to the Senate Select Committee on Intelligence 
Report 109-259 to S. 3237, requesting a report on ``the 
advisability of providing federal retirement benefits to United 
States citizens who were employees of Air America or an 
associated company prior to 1977, during the time that the 
company was owned or controlled by the United States and 
operated by the CIA.'' Although the letter describes the legal 
basis for denying federal retirement benefits to employees of 
Air America, it did not provide the factual background that 
would allow Congress to make an assessment of whether to 
provide employees of Air America with federal retirement 
benefits. The report requested in Section 413 therefore 
continues to be necessary for a comprehensive exploration of 
the underlying issues.

Section 414. Repeal of certain authorities relating to the Office of 
        the National Counterintelligence Executive

    Section 414 amends the authorities and structure of the 
Office of the NCIX to eliminate certain independent 
administrative authorities that had been vested in the NCIX 
when that official was appointed by and reported to the 
President. Those authorities are unnecessary now that the NCIX 
is to be appointed by and is under the authority of the DNI.

Section 415. Applicability of the Privacy Act to the Director of 
        National Intelligence and Office of the Director of National 
        Intelligence

    The Privacy Act (5 U.S.C. 552a) has long contained a 
provision under which the DCI and then (after enactment of the 
Intelligence Reform Act) the CIA Director could promulgate 
rules to exempt any system of records within the CIA from 
certain disclosure requirements under the Act. The provision 
was designed to ensure that the CIA could provide safeguards 
for certain sensitive information in its records systems. In 
assuming the leadership of the Intelligence Community, the DNI 
similarly requires the ability to safeguard sensitive 
information in records systems within the ODNI. Section 414 
extends to the DNI the authority to promulgate rules under 
which records systems of the ODNI may be exempted from certain 
Privacy Act disclosure requirements.

Section 416. Inapplicability of Federal Advisory Committee Act to 
        advisory committees of the Office of the Director of National 
        Intelligence

    Congress enacted the Federal Advisory Committee Act (FACA) 
(5 U.S.C. App.) to regulate the use of advisory committees 
throughout the Federal Government. FACA sets forth the 
responsibilities of the Executive branch with regard to such 
committees and outlines procedures and requirements for them. 
As originally enacted in 1972, FACA expressly exempted advisory 
committees utilized by the CIA and the Federal Reserve System. 
Section 416 amends FACA to extend this exemption to advisory 
committees established or used by the ODNI. The DNI should 
inform the intelligence committees periodically about the 
composition and use by the ODNI of advisory committees.

                Subtitle B--Central Intelligence Agency


Section 421. Inapplicability to the Director of the Central 
        Intelligence Agency of requirement for annual report on 
        progress in auditable financial statements

    Section 421 relieves the CIA Director from the requirement 
in Section 114A of the National Security Act of 1947 to submit 
to the congressional intelligence committees an annual report 
describing the activities being taken to ensure that financial 
statements of the CIA can be audited in accordance with 
applicable law and the requirements of OMB. Although the 
Committee remains concerned that the CIA has had minimal 
success in achieving unqualified opinions on its financial 
statements, the report required by Section 114A, however, is 
unnecessary as the Committee now receives annual audits of 
CIA's financial statements from the CIA Inspector General. The 
requirements of Section 114A continue to apply to the Directors 
of NSA, DIA, and NGA.

Section 422. Additional functions and authorities for protective 
        personnel of the Central Intelligence Agency

    Section 422 amends Section 5(a)(4) of the CIA Act of 1949 
(50 U.S.C. 403f(a)(4)) which authorizes protective functions by 
designated security personnel who serve on CIA protective 
details.
    Section 422 authorizes protective detail personnel, when 
engaged in, and in furtherance of, the performance of 
protective functions, to make arrests in two circumstances. 
Protective detail personnel may make arrests without a warrant 
for any offense against the United States--whether a felony, 
misdemeanor, or infraction--that is committed in their 
presence. They may also make arrests without a warrant if they 
have reasonable grounds to believe that the person to be 
arrested has committed or is committing a felony, but not other 
offenses, under the laws of the United States. The provision 
specifically does not grant any authority to serve civil 
process or to investigate crimes.
    Section 422 provides that the CIA Director and the Attorney 
General will issue regulations or guidelines that will provide 
safeguards and procedures to ensure the proper exercise of this 
authority. These shall be provided to the congressional 
intelligence committees.
    The authority provided by this section is consistent with 
those of other Federal elements with protective functions, such 
as the Secret Service (18 U.S.C. 3056(c)(1)(C)), the State 
Department Diplomatic Security Service (22 U.S.C. 2709(a)(5)), 
and the United States Capitol Police (2 U.S.C. 1966(c)). The 
grant of arrest authority is supplemental to all other 
authority CIA protective detail personnel have by virtue of 
their statutory responsibility to perform the protective 
functions set forth in the CIA Act of 1949.
    In requesting that the Congress extend this authority to 
the CIA, the DNI has represented that this ``arrest authority 
will contribute significantly to the ability of CIA protective 
detail personnel to fulfill their responsibility to protect 
officials against serious threats without being dependent on 
the response of federal, state, or local law enforcement 
officers.'' It is essential, in the regulations or guidelines 
approved by the CIA Director and the Attorney General, and in 
the supervision and training of protective duty personnel, that 
the use of the authority is firmly kept to its purpose, namely, 
protecting officials and any other covered persons against 
serious threats.
    Section 422 also authorizes the CIA Director on the request 
of the DNI to make CIA protective detail personnel available to 
the DNI and to other personnel within the ODNI.
    The CIA Director should provide to the congressional 
intelligence committees regulations or guidelines that are 
approved by the Director and the Attorney General. The Director 
should also keep the congressional intelligence committees 
fully and currently informed about any use of this authority.

Section 423. Technical amendments relating to titles of certain Central 
        Intelligence Agency positions

    Section 423 replaces out-of-date titles for CIA positions 
with the current titles of the successors of those positions in 
Section 17 of the Central Intelligence Agency Act of 1949 (50 
U.S.C. 403q). This provision of Section 17 pertains to the 
obligation of the CIA Inspector General to notify the 
congressional intelligence committees about investigations, 
inspections, or audits concerning high-ranking CIA officials.

              Subtitle C--Defense Intelligence Components


Section 431. Enhancement of National Security Agency training program

    Section 16 of the National Security Agency Act of 1959 (50 
U.S.C. 402 note) authorizes the National Security Agency (NSA) 
to establish an undergraduate training program to facilitate 
recruitment of individuals with skills critical to its mission.
    Section 431 amends Section 16 to permit the NSA Director to 
protect intelligence sources and methods by deleting a 
requirement that NSA publicly identify to educational 
institutions students who are NSA employees or training program 
participants. Deletion of this disclosure requirement will 
enhance the ability of NSA to protect personnel and prospective 
personnel and to preserve the ability of training program 
participants to undertake future clandestine or other sensitive 
assignments for the Intelligence Community.
    The Committee recognizes that nondisclosure is appropriate 
when disclosure would threaten intelligence sources or methods, 
would endanger the life or safety of the student, or would 
limit the employee's or prospective employee's ability to 
perform intelligence activities in the future. Notwithstanding 
the deletion of the disclosure requirement, the Committee 
expects NSA to continue to prohibit participants in the 
training program from engaging in any intelligence functions at 
the institutions they attend under the program. See H.R. Rep. 
No. 99-690, Part I (July 17, 1986) (``NSA employees attending 
an institution under the program will have no intelligence 
function whatever to perform at the institution.'').

Section 432. Codification of authorities of National Security Agency 
        protective personnel

    Section 432 amends the National Security Agency Act of 1959 
(50 U.S.C. 402 note) by adding a new Section 20 to clarify and 
enhance the authority of protective details for NSA.
    New Section 21(a) would authorize the Director of NSA to 
designate NSA personnel to perform protective detail functions 
for the Director and other personnel of NSA who are designated 
from time to time by the Director as requiring protection. 
Section 11 of the NSA Act of 1959 presently provides that the 
Director of NSA may authorize agency personnel to perform 
certain security functions at NSA headquarters, at certain 
other facilities, and around the perimeter of those facilities. 
The new authority for protective details would enable the 
Director of the NSA to provide security when the Director or 
other designated personnel require security away from those 
facilities.
    New Section 21(b) would provide that NSA personnel, when 
engaged in performing protective detail functions, and in 
furtherance of those functions, may exercise the same arrest 
authority that Section 422 provides for CIA protective detail 
personnel. The arrest authority for NSA protective detail 
personnel would be subject to guidelines approved by the 
Director of NSA and the Attorney General. The purpose and 
extent of that arrest authority, the limitations on it, and 
reporting expectations about it are described in the section-
by-section explanation for Section 422. That analysis and 
explanation applies equally to the arrest authority provided to 
NSA protective detail personnel by Section 21(b).
    While this bill provides separate authority for CIA and NSA 
protective details, the DNI should advise the congressional 
intelligence committees whether overall policies, procedures, 
and authority should be provided for protective services, when 
necessary, for other IC elements or personnel (or their 
immediate families).

Section 433. Inspector General matters

    The Inspector General Act of 1978 (Pub. L. No. 95-452 
(October 12, 1978)) established a government-wide system of 
Inspectors General, some appointed by the President with the 
advice and consent of the Senate and others ``administratively 
appointed'' by the heads of their respective Federal entities. 
These IGs were authorized to ``conduct and supervise audits and 
investigations relating to the programs and operations'' of the 
government and ``to promote economy, efficiency, and 
effectiveness in the administration of, and . . . to prevent 
and detect fraud and abuse in, such programs and operations.'' 
5 U.S.C. App. 2. They also perform an important reporting 
function, ``keeping the head of the establishment and the 
Congress fully and currently informed about problems and 
deficiencies relating to the administration of . . . programs 
and operations and the necessity for and progress of corrective 
action.'' Id. The investigative authorities exercised by 
Inspectors General, and their relative independence from the 
government operations they audit and investigate, provide an 
important mechanism to ensure that the operations of the 
government are conducted as efficiently and effectively as 
possible.
    The IGs of the CIA and Departments of Defense, Energy, 
Homeland Security, Justice, State, and Treasury are appointed 
by the President with the advice and consent of the Senate. 
These IGs--authorized by either the Inspector General Act of 
1978 or Section 17 of the CIA Act of 1949--enjoy a degree of 
independence from all but the head of their respective 
departments or agencies. They also have explicit statutory 
authority to access information from their departments or 
agencies or other United States Government departments and 
agencies and may use subpoenas to access information (e.g., 
from an agency contractor) necessary to carry out their 
authorized functions.
    The National Reconnaissance Office, the Defense 
Intelligence Agency, the National Security Agency and the 
National Geospatial-Intelligence Agency have established their 
own ``administrative'' Inspectors General. However, because 
they are not identified in Section 8G of the Inspector General 
Act of 1978, they lack explicit statutory authorization to 
access information relevant to their audits or investigations, 
or to compel the production of information via subpoena. This 
lack of authority has impeded access to information, in 
particular information from contractors that is necessary for 
them to perform their important function. These Inspectors 
General also lack the indicia of independence necessary for the 
Government Accountability Office to recognize their annual 
financial statement audits as being in compliance with the 
Chief Financial Officers Act of 1990 (Pub. L. No. 101-576 
(November 15, 1990)). The lack of independence also prevents 
the DoD IG, and would prevent the Inspector General of the 
Intelligence Community, from relying on the results of NRO, 
DIA, NSA, or NGA Inspector General audits or investigations 
that must meet ``generally accepted government auditing 
standards.''
    To provide an additional level of independence and to 
ensure prompt access to the information necessary for these IGs 
to perform their audits and investigations, Section 433 amends 
Section 8G(a)(2) of the Inspector General Act of 1978 to 
include NRO, DIA, NSA, and NGA as ``designated federal 
entities.'' As so designated, the heads of these IC elements 
will be required by statute to administratively appoint 
Inspectors General for these agencies.
    Also, as designated Inspectors General under the Inspector 
General Act of 1978, these Inspectors General will be 
responsible to the heads of the NRO, DIA, NSA, and NGA. The 
removal or transfer of any of these IGs by the head of their 
office or agency must be promptly reported to the congressional 
intelligence committees. These Inspectors General will also be 
able to exercise other investigative authorities, including 
those governing access to information and the issuance of 
subpoenas, utilized by other Inspectors General under the 
Inspector General Act of 1978.
    To protect vital national security interests, Section 433 
permits the Secretary of Defense, in consultation with the DNI, 
to prohibit the Inspectors General of the NRO, DIA, NSA, and 
NGA from initiating, carrying out, or completing any audit or 
investigation they are otherwise authorized to conduct. This 
authority is similar to the authority of the CIA Director under 
Section 17 of the CIA Act of 1949 with respect to the Inspector 
General of the CIA and the authority of the Secretary of 
Defense under Section 8 of the Inspector General Act of 1978 
with respect to the DoD Inspector General. It will provide the 
President, through the Secretary of Defense, in consultation 
with the DNI, a mechanism to protect extremely sensitive 
intelligence sources and methods or other vital national 
security interests. The Committee expects that this authority 
will be exercised rarely by the DNI or the Secretary of 
Defense.

Section 434. Confirmation of appointment of heads of certain components 
        of the intelligence community

    Under present law and practice, the directors of the NSA, 
NGA, and NRO, each with a distinct and significant role in the 
national intelligence mission, are not confirmed by the Senate 
in relation to their leadership of these agencies. Presently, 
the President appoints the Directors of NSA and NGA, and the 
Secretary of Defense appoints the Director of the NRO. None of 
the appointments must be confirmed by the Senate, unless a 
military officer is promoted or transferred into the position. 
Under that circumstance, Senate confirmation of the promotion 
or assignment is the responsibility of the Committee on Armed 
Services. That committee's review, however, relates to the 
military promotion or assignment and not specifically to the 
assumption by the individual of the leadership of a critical IC 
element.
    Section 434 provides, expressly and uniformly, that the 
heads of each of these entities shall be nominated by the 
President and that the nominations will be confirmed by the 
Senate. NSA, NGA, and NRO play a critical role in the national 
intelligence mission. Their spending comprises a significant 
portion of the entire intelligence budget of the United States, 
and a substantial portion of the NIP. Through advice and 
consent, the Senate can enable the Congress to fulfill more 
completely its responsibility for providing oversight to the 
intelligence activities of the United States Government. 
Section 434 does not alter the role of the Committee on Armed 
Services in reviewing and approving the promotion or assignment 
of military officers.
    Section 434(e) provides that the amendments made by Section 
434 apply prospectively. Therefore, the Directors of NSA, NGA, 
and NRO on the date of the enactment of this Act will not be 
affected by the amendments, which will apply initially to the 
appointment and confirmation of their successors.

Section 435. Clarification of national security missions of National 
        Geospatial-Intelligence Agency for analysis and dissemination 
        of certain intelligence information

    The National Imagery and Mapping Agency Act of 1996 (Pub. 
L. No. 104-201 (September 23, 1996) (NIMA Act)) formally merged 
the imagery analysis and mapping efforts of the Department of 
Defense and the CIA. In the NIMA Act, Congress cited a need 
``to provide a single agency focus for the growing number and 
diverse types of customers for imagery and geospatial 
information resources within the Government . . . to harness, 
leverage, and focus rapid technological developments to serve 
the imagery, imagery intelligence, and geospatial information 
customers.'' Section 1102(1) of the NIMA Act. Since then, there 
have been rapid developments in airborne and commercial imagery 
platforms, new imagery and geospatial phenomenology, full-
motion video, and geospatial analysis tools.
    Section 921 of the National Defense Authorization Act for 
Fiscal Year 2004 (Pub. L. No. 108-136 (November 24, 2003)) 
changed the name of the National Imagery and Mapping Agency to 
the National Geospatial-Intelligence Agency. The name change 
was intended to introduce the term ``geospatial intelligence'' 
to better describe the unified activities of NGA related to the 
``analysis and visual representation of characteristics of the 
earth and activity on its surface.'' See S. Rep. 108-46 (May 
13, 2003) (accompanying The National Defense Authorization Act 
for Fiscal Year 2004, S. 1050, 108th Cong., 1st Sess.).
    Though the NGA has made significant progress toward 
unifying the traditional imagery analysis and mapping missions 
of the CIA and Department of Defense, it has been slow to 
embrace other facets of ``geospatial intelligence,'' including 
the processing, storage, and dissemination of full-motion video 
(FMV) and ground-based photography. Rather, the NGA's 
geospatial products repositories--containing predominantly 
overhead imagery and mapping products--continue to reflect its 
heritage. While the NGA is belatedly beginning to incorporate 
more airborne and commercial imagery, its data holdings and 
products are nearly devoid of FMV and ground-based photography.
    The Committee believes that FMV and ground-based 
photography should be included, with available positional data, 
in NGA data repositories for retrieval on Department of Defense 
and IC networks. Current mission planners and military 
personnel are well-served with traditional imagery products and 
maps, but FMV of the route to and from a facility or 
photographs of what a facility would look like to a foot 
soldier--rather than from an aircraft--would be of immense 
value to military personnel and intelligence officers. Ground-
based photography is amply available from open sources, as well 
as other government sources such as military units, United 
States embassy personnel, Defense Attaches, Special Operations 
Forces, foreign allies, and clandestine officers. These 
products should be better incorporated into NGA data holdings.
    To address these concerns, Section 435 adds an additional 
national security mission to the responsibilities of the NGA. 
To fulfill this new mission, NGA would be required, as directed 
by the DNI, to develop a system to facilitate the analysis, 
dissemination, and incorporation of likenesses, videos, or 
presentations produced by ground-based platforms, including 
handheld or clandestine photography taken by or on behalf of 
human intelligence collection organizations or available as 
open-source information into the National System for Geospatial 
Intelligence.
    Section 435 also makes clear that this new responsibility 
does not include the authority to manage the tasking of 
handheld or clandestine photography taken by or on behalf of 
human intelligence collection organizations. Although Section 
435 does not give the NGA direct authority to set technical 
requirements for collection of handheld or clandestine 
photography, the Committee encourages the NGA to engage IC 
partners on these technical requirements to ensure that their 
output can be incorporated into the National System for 
Geospatial-Intelligence.
    Section 435 does not modify the definition of ``imagery'' 
found in Section 467(2)(A) of Title 10, U.S.C., or alter any of 
the existing national security missions of the NGA. With 
Section 435, the Committee stresses the merits of FMV and 
ground-based photography and clarifies that the exclusion of 
``handheld or clandestine photography taken by or on behalf of 
human intelligence organizations'' from the definition of 
``imagery'' under the NIMA Act does not prevent the 
exploitation, dissemination, and archiving of that photography. 
In other words, NGA would still not dictate how human 
intelligence agencies collect such ground-based photography, 
have authority to modify its classification or dissemination 
limitations, or manage the collection requirements for such 
photography. Rather, NGA should simply avail itself of this 
ground-based photography, regardless of the source, but within 
the security handling guidelines consistent with the 
photography's classification as determined by the appropriate 
authority.

                       Subtitle D--Other Elements


Section 441. Clarification of inclusion of Coast Guard and Drug 
        Enforcement Administration as elements of the intelligence 
        community

    Section 441 restores, with respect to the United States 
Coast Guard, the prior definition of ``intelligence community'' 
in the National Security Act of 1947 applicable to that 
service. See 50 U.S.C. 401a. Section 1073 of the Intelligence 
Reform Act modified the definition of ``intelligence 
community,'' inadvertently limiting the Coast Guard's inclusion 
in the Intelligence Community to the Office of Intelligence or 
those portions of the Coast Guard concerned with the analysis 
of intelligence. Section 441 clarifies that all of the Coast 
Guard's intelligence elements are included within the 
definition of the ``intelligence community.''
    Section 441 also codifies the joint decision of the DNI and 
Attorney General to designate an office within the Drug 
Enforcement Administration as an element of the Intelligence 
Community.

        TITLE V--FOREIGN INTELLIGENCE AND INFORMATION COMMISSION


Section 501. Short Title

    Title V of the bill establishes a Foreign Intelligence and 
Information Commission (``the Commission'') to assess needs and 
provide recommendations to improve foreign intelligence and 
information collection, analysis and reporting. Section 501 
provides that this title may be cited as the ``Foreign 
Intelligence and Information Commission Act.''

Section 502. Definitions

    Section 502 provides definitions, including subsection 
502(6) which defines ``information'' to include information of 
relevance to the foreign policy of the United States collected 
and conveyed through diplomatic reporting and other reporting 
by personnel of the Government of the United States who are not 
employed by an element of the Intelligence Community, including 
public and open-source information.

Section 503. Findings

    Section 503 provides findings of Congress. Among the 
findings are: Accurate, timely, and comprehensive foreign 
intelligence and information are critical to the national 
security of the United States and the furtherance of the 
foreign policy goals of the United States; it is in the 
national security and foreign policy interests of the United 
States to ensure the global deployment of personnel of the 
Government of the United States who are responsible for 
collecting, reporting, and analyzing foreign Intelligence 
Information, including specifically personnel from the 
Intelligence Community and the Department of State, as well as 
other elements of the Government of the United States, and that 
adequate resources are committed to effect such collection, 
reporting and analysis.

Section 504. Establishment and functions of the Commission

    Section 504 sets forth the functions of the Commission to 
include evaluating global strategies of the United States to 
collect and analyze foreign intelligence and information based 
on current and projected national security and foreign policy 
priorities; providing recommendations to improve the process 
for formulating such strategies; evaluating the extent to which 
the Government of the United States coordinates such strategies 
across agencies and clandestine, diplomatic, military and open-
source channels; and providing recommendations to improve that 
coordination.
    In addition, the functions of the Commission also include 
evaluating and providing recommendations related to the 
allocation of human and budgetary resources through the 
interagency process; the role of country missions in the 
interagency process; the extent to which collection and 
analytic capabilities meet requirements related to strategic 
issues and anticipating crises or emerging threats and whether 
human and budgetary resources have been directed to such 
requirements; the role of out-of-capital embassy posts in 
contributing to information collection objectives; the 
promotion and development of language, cultural training and 
other relevant qualifications within the Intelligence Community 
and the Department of State; and the capabilities to collect 
and report on ungoverned and undergoverned countries and 
regions, terrorist safe havens, stability, radicalization, and 
other concerns.

Section 505. Members and staff of the Commission

    Section 505 establishes that the Commission shall be 
composed of 14 members, to include three members appointed by 
the majority leader of the Senate, three members appointed by 
the minority leader of the Senate, three members appointed by 
the Speaker of the House of Representatives, three members 
appointed by the minority leader of the House of 
Representatives, one nonvoting member appointed by the Director 
of National Intelligence, and one nonvoting member appointed by 
the Secretary of State.
    Members of the Commission shall be private citizens with 
knowledge and experience in foreign intelligence and 
information collection, analysis, and reporting; knowledge and 
experience in national security and foreign policy of the 
United States gained through service in the Department of State 
or other appropriate agency or department or independent 
organization with expertise in the field of international 
affairs; or knowledge and experience with foreign policy 
decision making. The members of the Commission shall designate 
one of the voting members to serve as chair.
    Subsection 505(b) provides for the staff of the Commission 
and the selection of an Executive Director.

Section 506. Powers and duties of the Commission

    Section 506 provides the powers and duties of the 
Commission, including holding hearings, receiving evidence, and 
issuing and enforcement of subpoenas.

Section 507. Report of the Commission

    Section 507 provides that no later than 18 months after the 
appointment of members, the Commission shall submit an interim 
report to the congressional intelligence committees. No later 
than 6 months thereafter, the Commission shall submit a final 
report to the President, the Director of National Intelligence, 
the Secretary of State, and the congressional intelligence 
committees.

Section 508. Termination

    Section 508 provides that the Commission shall terminate 60 
days after the submission of the Commission's final report.

Section 509. Nonapplicability of Federal Advisory Committee Act

    Section 509 provides that the Federal Advisory Committee 
Act (5 U.S.C. App.) does not apply to the Commission.

Section 510. Funding

    Section 510 authorizes that of the amounts available for 
the NIP for fiscal year 2009, $5,000,000 shall be available for 
transfer to the Commission.

                     TITLE VI--TECHNICAL AMENDMENTS


Section 601. Technical amendment to the Central Intelligence Agency Act 
        of 1949

    Section 601 amends Section 5(a)(1) of the CIA Act of 1949 
by striking or updating outdated references to the National 
Security Act of 1947. The Intelligence Reform Act significantly 
restructured and renumbered multiple sections of the National 
Security Act of 1947, leaving references in Section 5(a)(1) of 
the CIA Act to provisions that no longer exist or that are no 
longer pertinent.

Section 602. Technical amendments relating to the multiyear National 
        Intelligence Program

    Section 602 updates references to the ``multiyear national 
foreign intelligence program'' in the National Security Act of 
1947 to incorporate and reflect organizational and nomenclature 
changes made by the Intelligence Reform Act.

Section 603. Technical clarification of certain references to Joint 
        Military Intelligence Program and Tactical Intelligence and 
        Related Activities

    Section 603 makes technical clarifications to Section 102A 
of the National Security Act of 1947 to preserve the 
participation of the DNI in the development of the annual 
budget for the Military Intelligence Program (MIP), the 
successor program of the Joint Military Intelligence Program 
and Tactical Intelligence and Related Activities. Section 503 
also preserves the requirement for consultation by the 
Secretary of the Defense with the DNI in the reprogramming or 
transfer of MIP funds.

Section 604. Technical amendments to the National Security Act of 1947

    Section 604 corrects several inadvertent technical 
anomalies in the National Security Act of 1947 arising from the 
amendments made to that Act by the Intelligence Reform Act.

Section 605. Technical amendments to the Intelligence Reform and 
        Terrorism Prevention Act of 2004

    Section 605 makes a number of technical and conforming 
amendments to the Intelligence Reform Act.

Section 606. Technical amendments to the Executive Schedule

    Section 606 makes technical amendments to the Executive 
Schedule to correct outdated and incorrect references. This 
section substitutes the ``Director of the Central Intelligence 
Agency'' for the previous reference in Executive Schedule Level 
II to the ``Director of Central Intelligence.'' See 5 U.S.C. 
5313. Section 606 also strikes outdated references to Deputy 
Directors of Central Intelligence from Executive Schedule Level 
III. See 5 U.S.C. 5314. The provision also corrects the 
erroneous reference to the ``General Counsel to the National 
Intelligence Director'' in Executive Schedule Level IV. See 5 
U.S.C. 5315.

                           COMMITTEE COMMENTS

Continued misuse of supplemental budgeting process

    The Committee had planned to review and recommend the 
authorization of supplemental appropriations to fund 
intelligence operations related to the conflict with al Qaeda 
and the continuing military operations in Iraq for the next 
fiscal year. However, the Administration has not yet forwarded 
its fiscal year 2009 supplemental appropriations request for 
these purposes. The Committee considers this delay unfortunate.
    The Committee again notes that the Administration's request 
for fiscal year 2009 fails to fund all planned intelligence 
operations in the base budget and continues improperly to rely 
on supplemental appropriations requests to pay for foreseeable 
expenses. Although by definition, supplemental appropriations 
bills ``are for unforeseen emergencies requiring urgent 
expenditures that cannot be postponed until enactment of the 
next regular annual appropriations act'' (Congressional 
Quarterly, American Congressional Dictionary), fiscal year 2009 
marks the eighth year that the Executive branch has requested 
supplemental appropriations to fund intelligence operations 
against al Qaeda and related terrorist groups, and the fifth 
year that such funding has been used to pay for IC costs in 
support of the conflict in Iraq.
    Last year, the Administration submitted its supplemental 
request to pay for the Global War on Terrorism and Iraq 
requirements at the same time the base budget was presented to 
the Congress. The timing of these requests demonstrates that 
the Administration can budget for these efforts as part of the 
regular budget process, and that the costs for the effort 
against al Qaeda and in Iraq are not unforeseen emergencies 
that should be funded in supplemental bills. Nevertheless, the 
Administration continues to undermine the budget process by 
refusing to fund in its base budget request the fiscal year 
2009 costs of intelligence operations in the conflict against 
al Qaeda and in support of military operations in Iraq.
    As the Committee noted last year, the reliance on 
supplemental appropriations to pay for known budget expenses 
hinders long-term planning; causes uncertainty in all programs 
funded through this process; increases costs due to a reliance 
on contractors; and otherwise discourages fiscal discipline by 
presenting additional opportunities to fund questionable 
projects. The Committee believes the next administration should 
return to more sound budget practice and substantially reduce 
if not eliminate this reliance on supplemental funding in the 
future.

Information sharing and information technology

    The Committee remains concerned about the status of 
information sharing across the Intelligence Community. The 9/11 
Commission stressed the need for the IC to change information 
procedures to ``provide incentives for sharing, to restore a 
better balance between security and shared knowledge.'' Today, 
at unique centers such as the National Counterterrorism Center 
and the National Counter Proliferation Center intelligence 
information from across the IC is made available to analysts 
either employed by or detailed to these centers regardless of 
classification or compartmentation. The level of information 
sharing at these mission-specific centers, however, remains the 
exception, not the rule. Individual IC agencies still do not 
routinely provide other intelligence agencies broad and 
seamless access to the intelligence information stored within 
their databases. These practices limit the utility of this 
intelligence and prevent the establishment of a truly 
synergistic, collaborative intelligence environment.
    Although the Committee believes the Director of National 
Intelligence has improved information sharing, and the 
Committee supports the Information Sharing Strategy issued by 
the DNI on February 22, 2008, the Committee believes more needs 
to be done and that it needs to be done more quickly. As 
outlined in the Information Sharing Strategy, the Chief 
Information Officer of the Intelligence Community (IC CIO) has 
taken a lead role by initiating the creation of a Single 
Information Environment (SIE), which will develop common email 
and other communications services, provide common data centers, 
integrate information technology (IT) communications lines, and 
consolidate software license purchases. While recognizing that 
policy issues remain to be addressed before the SIE's potential 
can be fully realized, the Committee believes the deployment of 
the SIE should be expedited. The Committee has recommended 
additional resources in fiscal year 2009 to enable the IC to 
shorten the time necessary to fully implement the SIE.
    The Committee notes that initiatives similar to the SIE in 
the private sector have saved significant resources and 
improved efficiency and effectiveness. The IC to date, however, 
has not been able adequately to determine current expenditures 
within the component agencies or the financial savings that 
will be generated by consolidating these services, centers and 
networks in the implementation of the SIE. Therefore, the 
Committee directs the DNI to provide a report to the 
congressional oversight committees by February 1, 2009, 
identifying the resources within the individual IC programs for 
each IT area to be consolidated in the SIE; and estimating the 
savings in individual IC programs to be gained through the 
implementation of each of the six IT areas of the SIE.
    The Committee is concerned that certain interpretations of 
the Intelligence Reform and Terrorism Prevention Act of 2004 
(Pub. L. No. 108-458, December 17, 2004) (Intelligence Reform 
Act) and other statutes granting authorities to the DNI and the 
IC CIO, and bureaucratic inertia, have hampered the 
implementation of the SIE and other information sharing 
initiatives. To correct this situation, the Committee has 
recommended steps to withhold some enterprise IT funding from 
the IC agencies pending a certification by the IC CIO that 
individual agencies are fully implementing the SIE initiative 
and otherwise complying with IC CIO direction.

Information sharing and counterintelligence

    The Committee recognizes that the revolution in information 
technology has increased the need for ensuring the security of 
intelligence information as well as the sources and methods 
used to collect that information. The spy of yesterday could 
steal reams of paper reports over time equal to a book's worth 
of information; the spy of today in a minute could steal more 
than a thousand times that amount of information on a thumb 
drive. As the IC improves its ability to share information 
across agencies, the need for proper security procedures grows 
as well.
    Although IC officials have raised the issue of security to 
limit access to valuable information, the Committee believes 
the costs of not sharing information outweigh the presumed 
benefits of outmoded information access policies. The same 
revolution in information technology that enables better 
information sharing also provides improved means to protect 
against an insider threat. The Committee has recommended 
increases in funding for counterintelligence and security to 
help ensure that improved information security proceeds at the 
same pace as improved information sharing.

Counterintelligence at the United States Embassy in Moscow

    The Committee remains concerned about the possible 
counterintelligence impact of the large number of foreign 
national employees working at the United States Embassy in 
Moscow. Committee members and staff who have visited came away 
with a view that the State Department could do more to improve 
the counterintelligence posture of Embassy Moscow.
    The Committee believes that this is a serious shortcoming 
that should be corrected on an urgent basis. The Committee 
encourages the Department of State to take immediate steps to 
improve conditions by hiring American guards to supervise the 
foreign national security force currently providing security.

Information security in the Intelligence Community

    The Committee is concerned about potential threats to IC 
information systems and seeks improved accountability for IC 
information security. The Committee, therefore, requests that 
the DNI submit a report to the congressional intelligence 
committees, by September 1, 2008, on the following topics.
    The DNI should include his interpretation of how the 
Federal Information Security Management Act (FISMA) of 2002 
applies to the Intelligence Community and whether FISMA and the 
subsequent Intelligence Reform Act are properly aligned. The 
report should provide a comprehensive accounting of which U.S. 
information security standards apply to which IC information 
systems; the specific roles and responsibilities of the DNI for 
IC information security under relevant legislation, executive 
orders, and current practices; and the important roles and 
responsibilities for IC information security leadership that 
are not currently held by the DNI.
    In addition, the report should discuss how accountability 
for IC information security could be improved and comment on 
the desirability of a community-wide, comprehensive process 
enabling the DNI to perform risk-need and cost-benefit analysis 
of potential information security initiatives such as those 
listed in the classified annex to accompany the classified 
Schedule of Authorizations.
    Also, the Committee requests that the Inspectors General of 
the DNI and the Department of Homeland Security jointly assess 
sharing of U.S. cyber threat information and submit a report to 
the congressional intelligence committees by September 1, 2008. 
This assessment should focus on how cyber threat intelligence 
information, including classified information, is shared with 
the U.S. critical infrastructure leadership; the mechanisms by 
which classified cyber threat information is distributed; and 
the effectiveness of this threat information sharing.
    Finally, the Committee requests that the DNI and the 
Secretary of Homeland Security perform a joint, comprehensive, 
up-to-date assessment of the cyber threat to U.S. critical 
infrastructure and submit a report on this assessment to the 
congressional intelligence committees by September 1, 2008. The 
assessment should include all types of cyber threats, of 
domestic or foreign origin, particularly those to U.S. electric 
power command and control systems.

Need for increased and stable research and development funding

    The Intelligence Community has a heralded history of 
conceiving, developing and deploying creative and innovative 
technologies in support of its intelligence collection mission. 
In the past, the IC was recognized as being more advanced than 
the leading edge of private industry in developing advanced 
technologies. This led to such successes as the U2 and SR-71 
spy planes, electro-optical satellites, and powerful 
supercomputers. In the past two decades, however, the advances 
in computer and other information technologies have been led by 
private industry. The IC has had to adapt in the wake of these 
complex and disruptive scientific breakthroughs. The Committee 
believes, to be successful in the future, the IC needs to not 
only keep up with new technologies but must lead the way in 
developing new sensors, analytical enablers, knowledge 
management tools, and other capabilities to provide the 
nation's policymakers and war fighters with an information 
advantage.
    Unfortunately, the IC in recent years has sacrificed 
investment in tomorrow's advanced research and development 
(R&D;) to pay for today's acquisition programs, including cost 
overruns and sensors of decreasing utility. Last year, in 
recognition of this problem, the DNI issued budget guidance to 
the IC agencies directing them to increase R&D; spending by one 
percent. Despite the DNI's guidance, the Intelligence Community 
did not produce such budget requests. The Committee believes 
this short-changing of R&D; must end.
    Today, the Intelligence Community spends approximately 
three percent of its budget on research and technology. The 
Committee's Technical Advisory Group studied how this level 
compared with how private industry invested in R&D;, and found 
that this level was significantly lower than companies in the 
automobile, energy and IT industries spend on the same 
function. While not being able to determine analytically the 
right level, the TAG found that the IC's current level of R&D; 
investment was on its face too low given the challenges the IC 
faces both today and in the future.
    As a result, the Committee has recommended significant 
changes to the budget request to follow the DNI's direction and 
increase R&D; spending in the IC to 4 percent of its total 
budget in fiscal year 2009. Further, the Committee believes the 
IC needs to gradually increase its R&D; spending to at least 
five percent to address future collection and analysis 
requirements. The Committee plans to recommend such growth in 
future authorization bills and to keep this funding stable to 
ensure the United States will be able to develop the next 
generation of sensors and systems to prevent attacks and 
strategic surprise.

FBI intelligence transformation

    The Committee has spent considerable time examining the 
efforts of the Federal Bureau of Investigation (FBI) to 
transform itself into a premier intelligence and national 
security organization. This has included briefings with current 
and former FBI officials, oversight visits to FBI field offices 
and Legal Attaches, meetings with representatives of other 
intelligence agencies regarding FBI transformation efforts, and 
exchanges with academics and think tank experts on the 
structure and functions of FBI national security components. 
Additionally, in October of 2007, the Committee held an open 
hearing with the Chairman and Vice Chairman of the National 
Commission on Terrorist Attacks Upon the United States (also 
known as the 9/11 Commission), who provided their assessment of 
FBI intelligence reform efforts.
    The Committee has come to the conclusion that the FBI must 
work harder and faster if it is to fulfill its national 
security and intelligence mission. Nearly seven years after the 
attacks of September 11, 2001, the FBI has yet to make the 
dramatic leaps necessary to address the threats facing our 
nation. The Committee has identified several areas where the 
FBI must focus to improve its mission performance and 
accelerate its reform efforts.
    As set forth in Section 333, the bill requires the Director 
of National Intelligence, in coordination with the Director of 
the FBI, to establish performance metrics and specific 
timetables related to progress in the areas outlined below. 
Additionally, the DNI is to submit a consolidated semi-annual 
report, which includes an assessment of the metrics, 
timetables, corrective actions, and activities being carried 
out to ensure that the FBI is improving its national security 
and intelligence mission performance. The report should be 
provided to the congressional intelligence committees semi-
annually for a period of five years beginning on the date of 
enactment.
    The Committee stands ready to assist the FBI in its 
transformation efforts, but notes that the FBI must improve its 
cooperation and transparency with Committee oversight 
activities. Too often the FBI has not cooperated in a manner as 
the Committee would have expected to Committee requests for 
information related to its intelligence and national security 
programs.

FBI and ODNI engagement

    The Committee believes additional cooperation between the 
Office of the Director of National Intelligence and the FBI is 
a prerequisite to successful FBI intelligence reform. The White 
House memorandum that established the FBI's National Security 
Branch (NSB) in 2005 stated that the DNI must concur with the 
FBI's nomination for the Executive Assistant Director of the 
NSB and that the Attorney General and the DNI must establish 
procedures to ensure the DNI can effectively ``communicate'' 
with FBI field offices and personnel. The Committee believes 
this does not go far enough and that the ODNI may require 
additional authorities to direct and manage the FBI's 
intelligence programs.
    Specifically, the Committee believes the ODNI should 
examine and address the FBI's NIP budget structure, 
intelligence enabling IT programs, efforts to advance an 
analytic culture, intelligence training curriculum, and the 
ability of the NSB to manage and direct intelligence programs 
enterprise wide. The Committee requests the ODNI focus on these 
efforts, and any others meant to strengthen FBI mission 
performance on national security and intelligence matters.

FBI and the National Intelligence Program budget structure

    The Committee's oversight of FBI budget matters has been 
impaired by the agreement reached by the previous DNI and the 
previous Attorney General on which elements of the FBI fall 
within the NIP. The agreement was an artificial construct 
intended to keep the FBI NIP numbers stable, and has had the 
detrimental effect of making it nearly impossible to track NIP 
resources accurately within the FBI. The agreement involves 
calculating varying percentages of agents, analysts, and 
infrastructure, and is so complicated that the proposed 
addition of funds to the FBI budget by the congressional 
appropriations committees required help from the DNI's Chief 
Financial Officer to parse how much of that funding was within 
the NIP. The FBI itself had such difficulty calculating the 
correct number of agents for the fiscal year 2007 budget 
request that it had to issue an errata sheet to the NIP 
Congressional Justification Book.
    At any given time, neither the Executive branch nor the 
Congress is able to calculate which FBI agents, analysts or IT 
systems are NIP-funded. Even more troubling, the Executive 
branch and Congress are unable to track whether NIP dollars are 
being expended and accounted for as they are authorized and 
appropriated. The Committee believes this unworkable 
arrangement must end and that the entire FBI NSB should be NIP 
funded. Auxiliary administrative services that support both the 
NSB and the rest of the FBI should be billed to the NSB and 
reimbursed with NIP funds. The ODNI and FBI should fully fund 
the NSB under the NIP in fiscal year 2010.

FBI and intelligence enabling information technology

    The Committee has had long-standing concerns about the 
FBI's management and execution of information technology 
projects that support and enhance the FBI's national security 
mission. These concerns include the lack of Internet access for 
special agents and intelligence analysts at their desktops, an 
underdeveloped case management system that is restricted to 
SECRET level information, and the slow expansion of the FBI's 
separate Top Secret/Sensitive Compartmented Information (TS/
SCI) level SCION data system.
    The Committee's October 2007 oversight hearing found that 
only a third of special agents and intelligence analysts have 
access to the Internet at their desktops. The Committee 
believes it is essential that NSB personnel have easy access to 
open source data available on the Internet and finds the FBI's 
lack of progress in expanding Internet access unacceptable.
    While it may not be necessary to provide Internet access to 
every individual FBI employee, the Internet's value as a basic 
research tool has been amply demonstrated, and the Committee 
believes that all intelligence analysts, intelligence 
professionals, and special agents within the FBI's National 
Security Branch should have desktop Internet access.
    The Committee is recommending a substantial increase in 
resources in the classified annex to this Act to expand desktop 
access to a larger number of NSB personnel.
    Likewise, the Committee remains concerned that the FBI 
lacks an IT system that can manage FBI case and document files, 
as well as enable the storage, analysis, and dissemination of 
foreign and domestic intelligence. In 2005, after spending $170 
million, the FBI was forced to cancel an IT system called 
Virtual Case File. In its place, the FBI has begun to implement 
a $425 million system called SENTINEL, which will not be fully 
operational until 2010. At this moment, the FBI still lacks the 
ability to store and share images and audio files associated 
with its intelligence investigations. Furthermore, the 
Committee is concerned that SENTINEL is limited to SECRET 
information, preventing the integration, analysis, and 
dissemination of IC information that is classified at the TS/
SCI level.
    As a full member of the Intelligence Community, the FBI 
must have an intelligence information infrastructure that can 
receive, process, analyze, and disseminate TS/SCI material. 
This system should be available to every FBI field office and 
Legal Attache. The FBI's Secure Work Environment initiative is 
an effort to construct Sensitive Compartmented Information 
Facilities (SCIFs) that would allow for the deployment of the 
FBI's TS/SCI information technology system called SCION. The 
FBI's national security workforce requires SCION, and a TS/SCI 
work environment, to effectively complete its mission. Yet, 
according to FBI projections, by the end of 2009, 28 percent of 
the targeted TS/SCI connectivity will not yet be deployed. The 
Committee finds this lack of TS/SCI connectivity unacceptable.
    Given these concerns, the Committee has been especially 
disappointed with the FBI's lack of transparency related to the 
development and deployment of its intelligence-related IT 
infrastructure. The Committee requested several unclassified 
assessments related to the SENTINEL program more than a year 
ago, but the FBI has refused to share these reports with the 
Committee. Moreover, the Committee has yet to receive follow-up 
reports detailing the expansion rate of SCIFs, which enable 
deployment of the TS/SCI information system. The Committee 
believes the ODNI and FBI must obtain an independent assessment 
of the current FBI information technology infrastructure, to 
include recommendations on what systems may need to be 
developed to support the FBI's national security mission. The 
Committee expects this report to be shared with congressional 
oversight committees as soon as it is completed.

Advancement of the FBI analytic culture

    At the Committee's October 2007 FBI oversight hearing, the 
Chairman and Vice Chairman of the National Commission on 
Terrorist Attacks Upon the United States provided their 
assessment of current FBI reform efforts. The Commissioners 
stated that: (1) FBI intelligence reform required robust 
oversight by the congressional intelligence committees; and (2) 
the role of intelligence analysts at the FBI must change 
dramatically. The Committee agrees.
    Although the number of intelligence analysts has doubled at 
the FBI since 2002, the FBI continues to face difficulties in 
training, managing, and retaining analysts.
    Training: Despite ``revamping'' intelligence analyst 
training almost every year since 2002, the FBI has failed to 
implement an effective training program. The FBI is currently 
engaged in ``revamping'' its analyst training once again. The 
latest training plan is a drastic change from past intelligence 
analyst training programs, yet the FBI has received little to 
no guidance from the ODNI. Considering the FBI's repeated 
failures to construct a successful intelligence analyst 
training course, the Committee finds the lack of ODNI guidance 
and assistance unacceptable.
    Management: The majority of intelligence analysts at the 
FBI are directly supervised by special agents who have little 
or no experience conducting intelligence analysis. An April 
2007 Department of Justice (DOJ) IG report found that a strong 
professional divide between analysts and special agents 
remains, impeding the collaboration needed to meet effectively 
the FBI's national security mission. The FBI's response at the 
October 2007 hearing that the cultural divide identified by the 
IG report is ``anecdotal,'' does not comfort the Committee. 
Moreover, the Committee does not believe FBI efforts to create 
a ``Managing Analysis Course'' for non-analysts is the 
appropriate response to the problems facing the FBI in this 
area.
    Retention: The FBI still lacks a robust intelligence 
analyst career path. The development of such a career path 
began in 2003 and continues to be a work in progress. The 
Committee believes there are too few intelligence analysts in 
senior positions of responsibility and that the FBI has 
neglected opportunities to utilize intelligence analysts to 
fill inherently non-law enforcement, intelligence-focused 
positions. For example, few Field Intelligence Groups are led 
by non-special agent personnel. The FBI was granted the 
authority in the Consolidated Appropriations Act of 2005 to 
utilize critical pay authority to obtain 24 Senior Intelligence 
Officer (SIO) positions portrayed as ``critical to the FBI's 
intelligence mission.'' In testimony to this Committee on 
January 25, 2007, the FBI described these SIOs as ``a cadre of 
senior analysts who will sustain the focus on issues about 
which policy makers and planners need information now.'' As of 
early 2008, the FBI has hired only 2 SIOs.
    The Committee has been impressed with the caliber of 
recently hired intelligence analysts. Many of these analysts 
have advanced degrees critical to the FBI's national security 
mission. As these new hires have entered the analyst workforce, 
their presence has highlighted the differences in skill sets 
among the FBI analytic community. A third of all intelligence 
analysts at the FBI were hired before the September 11, 2001 
attacks. Eighty percent of those intelligence analysts were 
promoted into intelligence analyst positions from clerical 
support positions. An FBI study in 2002 found that 66% of the 
FBI's analysts were ``unqualified'' to do their work. The 
diversity in skill sets has caused tension within the FBI and 
inhibited the advancement of the FBI analytical community. The 
Committee believes the FBI must take steps to deal with the 
vast discrepancy in analyst abilities.
    The Committee also believes the FBI should do more to 
advance the growth of its non-agent intelligence cadre and 
instructs the FBI to be more strategic in its deployment and 
use of special agents. Furthermore, the Committee instructs the 
FBI to continue the data collection begun by the IG of the 
Department of Justice to examine FBI efforts to hire, train, 
and retain intelligence analysts. Finally, the Committee 
directs the ODNI to engage the FBI on the training, management, 
and retention of the FBI intelligence analyst workforce by 
establishing a baseline for intelligence analyst performance 
and assisting in the creation of benchmarks and timelines for 
these reforms.

FBI intelligence training curriculum

    The Committee believes the ODNI is uniquely positioned to 
assist the FBI in creating and measuring the effectiveness of 
the FBI's national security and intelligence training programs.
    The Department of Justice Inspector General has released 
several reports detailing ``widespread and serious misuse'' of 
the FBI's National Security Letter (NSL) authorities. The IG 
reports did not find intentional misuse of authorities, but 
rather that poor training, oversight, and guidance contributed 
to the misuse of NSL authorities. The most recent DOJ IG report 
indicated that the FBI has made progress in these areas. The 
Committee believes that continued and robust training is 
necessary to ensure FBI personnel are safe-guarding American 
civil liberties, while utilizing all legal investigative tools 
to protect the nation.
    The Committee is also concerned about the lack of training 
provided to Joint Terrorism Task Force (JTTFs) members. 
According to information provided to the Committee, JTTF 
members receive ``on-the-job'' training that is augmented by 
Internet-based instruction. Considering the importance and 
complexity of the counterterrorism work conducted by JTTF 
officers, the Committee expects the FBI to develop a more 
demanding and structured training program that will equip JTTF 
members with the skills necessary to address the evolving 
threats from terrorism.
    The Committee is also concerned about the quality of the 
FBI's Domestic HUMINT Collection Course (DHCC). Although the 
course has received a contingent certification of endorsement 
from the ODNI, the Committee's HUMINT study group has 
criticized the DHCC for its low production rates, brevity, and 
general lack of rigor compared to other Intelligence Community 
HUMINT courses.
    Finally, the FBI's failure to create an effective 
intelligence analyst training course, referenced earlier in 
this report, has been an ongoing disappointment. The Committee 
strongly supports efforts by the FBI to properly train its 
workforce to ensure FBI personnel (and those detailees 
operating under FBI authorities) are equipped to utilize all 
legal investigative tools to protect the nation, while 
respecting and safe-guarding American civil liberties. The 
Committee believes the FBI will benefit substantially from ODNI 
guidance and assistance in creating and implementing effective 
intelligence and national security-related training programs.

Regionalization of the FBI Intelligence Program

    From an intelligence collection, analysis, management, and 
dissemination perspective, the Committee believes the current 
FBI intelligence management model is dramatically ineffective 
in supervising and managing intelligence and national security 
programs in FBI field offices. Field Intelligence Groups 
(FIGs), located in each of the FBI's 56 field offices, were 
established in 2003 to integrate the ``intelligence cycle'' 
into FBI field operations and manage the Field Office 
Intelligence Program. The Directorate of Intelligence, located 
within the National Security Branch of FBI headquarters, has 
been responsible for FIG management. Committee oversight 
activities, as well as internal and external consultancies, 
have found this management model to be ineffective. FIGs lack 
clear guidance, are poorly staffed, are led overwhelmingly by 
special agents, and are often ``surged'' to other FBI 
priorities. Moreover, the current management model has failed 
to link neighboring FIGs or promote larger regional analysis of 
trends and vulnerabilities.
    The Committee believes a regionalized intelligence and 
national security program would allow the Bureau to more 
effectively track and manage trends across the United States by 
creating an intelligence and national security reporting chain 
that is more manageable and accountable. The Committee believes 
such a model would allow the Director of the FBI and the 
Director of National Intelligence to more effectively and 
efficiently manage FBI intelligence and national security 
programs.
    The Committee expects the FBI to brief the Committee 
regularly on its efforts to regionalize the management of its 
intelligence and national security programs.

FBI's Weapons of Mass Destruction Directorate

    The Committee believes one of the gravest threats facing 
our nation is the threat from weapons of mass destruction 
(WMD). Unfortunately, the Weapons of Mass Destruction 
Directorate (WMDD) within the FBI is poorly positioned to work 
across FBI programs that are likely to encounter WMD threats 
and investigations. The Committee has yet to be provided with 
information on how activities of the WMDD are de-conflicted 
with other operational and analytical divisions. Accordingly, 
the Committee believes the FBI must clarify the role of the 
Directorate in relation to other FBI components. Additionally, 
the Committee directs the FBI to complete a report on the 
impact of eliminating the WMDD investigative functions and 
repositioning the WMDD as an organization that collects 
intelligence, conducts outreach, and offers specialized support 
to all operational divisions of the FBI. This report should be 
submitted to the congressional intelligence committees no later 
than November 1, 2008.

FBI National Security Workforce Management

    The Committee is concerned about the FBI's continued 
reliance on special agents to fill all types of positions. 
Substantial resources are devoted to providing Special Agents 
with unique skills and their appointments should be made in a 
manner that is effective and efficient. The Committee believes 
the use of special agents in organizational support functions 
unrelated to intelligence or law enforcement should be limited. 
Moreover, while special agents assigned to the intelligence 
career track should continue to compete for intelligence-
focused positions, the FBI should do more to encourage the 
growth of its non-agent intelligence professionals. This is not 
only cost-effective, but allows for better strategic 
positioning of the FBI national security workforce. 
Accordingly, the Committee directs the FBI to provide the 
congressional oversight committees with a plan to recapture and 
redirect special agents to mission critical areas by 
identifying job roles currently performed by special agents 
that could be shifted to intelligence analysts or other 
professional support. This plan should be submitted to the 
congressional intelligence committees no later than November 1, 
2008.

FBI headquarters staffing of National Security Programs

    The FBI has struggled to staff key national security and 
intelligence positions at FBI headquarters. In March 2007, only 
60 percent of the Counterterrorism supervisory special agent 
positions were filled. In the headquarters section that covers 
al-Qa'ida-related cases, more than 23 percent of the 
supervisory special agent positions were vacant. More recently, 
in September 2007, Director Mueller touted a new Desk Officer 
Program before the Senate Committee on Homeland Security and 
Governmental Affairs. Director Mueller stated that desk 
officers identify collection gaps; collaborate with partners; 
and focus not only on the management and advancement of 
existing cases, but also on maintaining a networked and 
coordinated national collection effort. Yet, according to 
information received by the Committee, the FBI has been unable 
to find applicants willing to apply for the 20 desk officer 
special agent positions. The FBI has attempted to address 
headquarters vacancies by offering 18-month temporary duty 
assignments (TDYs) and significant monetary bonuses, but these 
incentives have failed to significantly change the position 
vacancy rates in critical FBI national security and 
intelligence areas. The Committee expects the FBI to engage in 
a credible study to identify why it has been unable to attract 
personnel to headquarters for mission critical areas and to 
develop a plan to address permanently the high position vacancy 
rates in its national security and intelligence programs at FBI 
headquarters.

The Inspector General of the Central Intelligence Agency

    The CIA's Office of Inspector General serves a critical 
internal oversight function. As outlined in the Central 
Intelligence Agency Inspector General Act, 50 U.S.C. 403q, the 
CIA Inspector General has the responsibility for conducting 
independent inspections, investigations, and audits of CIA 
activities and operations to ensure that they are being 
conducted efficiently and in accordance with applicable law and 
regulations. By identifying problems and deficiencies and 
recommending corrective action to the Director, the Inspector 
General helps to improve the effectiveness and management of 
such programs. This internal oversight function is particularly 
important because the CIA's programs and operations are, by 
necessity, conducted largely in secret.
    Because the Inspector General has the obligation to report 
to the congressional intelligence committees about problems or 
deficiencies in CIA programs or operations, the CIA's Office of 
the Inspector General serves a vital role in facilitating 
effective congressional oversight of the CIA. As such, the 
Committee has a strong interest in preserving the independence 
and operational autonomy of the CIA's Inspector General and in 
ensuring that the CIA Inspector General can operate without 
fear of improper intervention or intimidation.
    In the spring of 2007, the Director of the CIA initiated a 
management review of the Office of the Inspector General. The 
Director stated that this review, conducted by a team within 
the CIA but outside the CIA's Office of the Inspector General, 
was necessary to address concerns arising from two reports 
prepared by the Office of the Inspector General. At the 
conclusion of the review in January 2008, the review team 
presented the CIA's Inspector General with a number of 
recommendations for the Office of Inspector General, some of 
which the Inspector General agreed to implement. The CIA 
Director subsequently sent out a message to the CIA workforce 
informing them of the initiation and resolution of the review, 
and describing steps taken by the CIA's Inspector General based 
on the review.
    The Committee is concerned that the Director's initiation 
of a review of the Office of the Inspector General could have 
been perceived by the CIA workforce and the public as an 
attempt to undermine the credibility of the Inspector General. 
The Committee recognizes that the applicable statute provides 
that the Inspector General ``shall report directly to and be 
under the general supervision of the [CIA] Director.'' Because 
the Inspector General has a critical role in effective 
congressional oversight, the Committee believes that the due 
care should be taken to ensure, in carrying out this authority, 
that the independence of the office is protected. Informing the 
congressional intelligence committees and seeking the 
assistance of an outside review organization, such as the 
President's Council on Integrity and Efficiency, rather than 
initiating a unilateral internal inquiry, could have helped 
alleviate such concerns.
    The Director's review of the CIA Office of the Inspector 
General highlights the possible need for additional legislative 
protections to safeguard the independence of the CIA Inspector 
General. The Committee therefore plans to study carefully the 
provisions of S. 2324, the Inspector General Reform Act of 
2007, to determine whether any of the provisions included in 
that Act should be added to the CIA Inspector General Act to 
strengthen the authorities of the CIA Inspector General.

CIA Lessons Learned Program

    The Committee commends the CIA for establishing a Lessons 
Learned Program and fully supports its growth at the 
operational and tactical level with the individual components 
of the CIA. The Committee firmly believes that for the CIA to 
truly become a learning organization--one in which knowledge is 
captured, preserved, and shared with those who can benefit--the 
CIA must institutionalize the lessons learned process and 
develop policy supporting that effort.
    The Committee encourages the CIA to increase the number and 
type of studies, to create web-based lesson-sharing 
environments, to modernize its oral history programs and to 
support component-based lessons learned activities throughout 
the CIA. Additional lessons learned subject matter experts 
should be hired as well as additional officers to enable the 
CIA to conduct interviews to record the insights of officers in 
key positions as they rotate on to new assignments or move into 
retirement. The CIA should use these interviews as well as 
historical and archival research to conduct lessons learned 
studies and incorporate these back into the CIA education and 
work environments.
    The Committee fully expects the CIA to improve its internal 
processes for self-examination, including increasing the use of 
formal lessons learned studies to learn from its successes and 
mistakes and to anticipate and be ready for new challenges. The 
CIA should follow the lead of other high risk, high reliability 
organizations by investing time and resources in continuous 
learning and knowledge sharing. This will strengthen the 
professionalism and confidence of not only the CIA's new hires, 
but the entire CIA workforce.

National Application Office of the Department of Homeland Security

    The Committee has been closely following the development of 
the National Application Office (NAO) within the Department of 
Homeland Security. The NAO is intended to centralize and 
facilitate the sharing of imagery from intelligence agency 
systems under appropriate circumstances for purposes related to 
law enforcement, homeland security, and civil applications. 
Because the NAO relates to the use of intelligence resources 
for domestic purposes, the Congress has been attentive to civil 
liberties and privacy concerns associated with the NAO.
    Section 525 of the 2008 Department of Homeland Security 
Appropriations Act stated that ``none of the funds provided in 
this Act shall be available to commence operations of the 
National Applications Office . . . until the Secretary 
certifies that th[is] program[ ] compl[ies] with all existing 
laws, including all applicable privacy and civil liberties 
standards, and that certification is reviewed by the Government 
Accountability Office.'' Although the Government Accountability 
Office (GAO) has not conducted a review of this certification, 
the Secretary of Homeland Security has informed Congress that 
he has ``determined that the standard set forth in Section 525 
. . . is met'' thereby certifying that the NAO complies with 
all existing laws, including all applicable privacy and civil 
liberties standards, with respect to its planned operations in 
what are known as the civil application and homeland security 
domains.
    The Committee, however, has not been provided the legal 
framework or the standard operating procedures for the use of 
these resources in the law enforcement domain. The Committee 
concurs with the decision that the NAO should proceed pending 
the GAO review of the certification; however, the Committee 
strongly opposes the NAO fielding any law enforcement requests 
until the legal framework and standard operating procedures of 
the law enforcement domain are completed, certified by the 
Secretary, reviewed by the GAO, and provided to the appropriate 
congressional oversight committees.

The Department of Homeland Security and state and local fusion centers

    The purpose of state and local fusion centers is to provide 
state and local officials with situational awareness, threat 
information and intelligence on a continuous basis. The 
Committee notes a review by the Congressional Research Service, 
which found that ``there is no-model for how a [fusion] center 
should be constructed'' and that the fusion centers ``have 
increasingly gravitated toward an all-crimes and even broader 
all-hazard approach.''
    Therefore, the Committee requests that the Secretary of the 
Department of Homeland Security complete a formal national 
fusion center strategy outlining the federal government's clear 
expectations of fusion centers, its position on how federal 
funding will be sustained over time, and metrics for assessing 
fusion center performance.

Intelligence Advanced Research Projects Activity

    The Committee wishes to ensure that the Intelligence 
Advanced Research Projects Activity (IARPA) has the appropriate 
authorities and stature to be effective in fulfilling its 
unique intelligence community mission. The Committee therefore 
requests that the DNI submit a comprehensive report to the 
congressional intelligence committees by September 1, 2008, 
that addresses the following topics.
    The DNI should address the desirability of creating IARPA 
and the position of the IARPA Director formally in statute; the 
rationale for placing IARPA within the DNI's acquisition 
directorate; and the desirability of streamlining the IARPA 
reporting chain such that the IARPA Director reports directly 
to the DNI's Director for Science & Technology and this 
official reports directly to the DNI. In addition, the report 
should address the timeline for the DNI to approve the 
delegation of personnel and contracting authorities to the 
IARPA Director; any issues that would prevent the delegation of 
such authorities; and the desirability of authorizing this 
delegation of authorities formally in legislation.
    The Committee is interested in the DNI's views on 
authorizing the IARPA Director to employ highly qualified 
scientific experts and to use any other staffing mechanisms to 
support the unique mission of IARPA; delegating to the IARPA 
Director existing authorities to conduct streamlined 
acquisition, procurement, and contracting in support of IARPA 
needs; authorizing the IARPA Director to give grants, awards, 
or prizes to support IARPA research and development programs, 
grand challenges or related projects; and any other authorities 
that could improve the flexibility or effectiveness of IARPA.

International Traffic in Arms Regulations

    The Committee is concerned about the potential unintended 
consequences of the International Traffic in Arms Regulations 
(ITAR). The United States currently maintains a lead in many 
advanced aerospace technologies, but that lead is slipping or 
has already passed. Alleged foreign frustrations with ITAR are, 
in some cases, leading foreign governments to subsidize 
``cottage'' industries to provide alternative sources of ITAR-
restricted technologies.
    In 2006, 21 European countries and Canada endorsed the 
research agenda of the European Space Technology Platform 
(ESTP). Among the many goals of the ESTP are to ``reduce 
European dependence'' on foreign space technology and to 
``promote the worldwide competitiveness of the European 
industrial base.'' A press release cited the ESTP stakeholders 
sharing views on the need to invest in ``ITAR-free 
technologies.''
    A former head of the Defense Threat Reduction Agency was 
cited in a February 26, 2007, Space News article as saying the 
rules restricting the export of U.S. satellites and components 
``need a thorough overhaul because they are damaging U.S. 
industry with no corresponding benefit to national security.'' 
The Committee does not debate the intent of ITAR, but is 
concerned about its unintended consequences which may be 
detrimental to our national security.
    The U.S. no longer holds monopolies on many advanced 
aerospace technologies. If U.S. companies cannot compete freely 
in the global market and are challenged by foreign-subsidized 
firms with newer, and perhaps better, technologies, the end 
result may be that U.S. firms will go out of business or decide 
no longer to produce these niche technologies. In turn, this 
could result in further erosion of the U.S. technological lead, 
increased U.S. reliance on foreign suppliers for the same 
technologies the U.S. currently restricts, potentially 
unrestricted sales of advanced technologies from these same 
foreign suppliers to nations hostile to the U.S., and U.S. job 
loss.
    The Committee recognizes that it is difficult to quantify 
ITAR's real impact on U.S. industry, and that ITAR may often be 
cited as the ``scapegoat'' for industry's troubles. Further, 
the Committee recognizes that if certain ITAR provisions were 
loosened or streamlined there would be an increased risk of 
proliferation of advanced technologies into the wrong hands. 
However, ITAR's net effect on the U.S. aerospace industry may, 
in the long run, be more damaging to national security.
    The Committee requests that the DNI and the Secretary of 
Defense charter an independent, objective review of this issue 
to be delivered to the Congress no later than July 1, 2009. The 
report should evaluate the impact of ITAR on the U.S. aerospace 
industry, gauge the degree to which ITAR spurs foreign nations 
to develop indigenous aerospace technologies, assess the 
proliferation risks of modifying ITAR restrictions, and provide 
recommendations on improving ITAR's aerospace-related processes 
to achieve a better balance between promoting U.S. aerospace 
technology and discouraging the proliferation of this 
technology to other countries.

National Geospatial-Intelligence Agency mission

    The Committee finds that strong functional management of 
the IC and the Department of Defense geospatial intelligence 
enterprise remains wanting. Significant gaps remain in the 
integration of airborne, commercial, and non-traditional 
imagery; new geospatial-related capabilities are being under-
resourced or provided little architectural construct against 
which to plan; the overall architecture contains imbalances 
between the sensors and their supporting tasking, processing, 
exploitation, and dissemination (TPED) systems; and imagery-
related investments are being driven by disparate agencies with 
little consideration of efficiencies in the overall 
architecture. These problems have resulted in excessive costs; 
poor interoperability; costly ``crash'' TPED programs for 
systems already in operation; and lost opportunities to invest 
in new capabilities.
    The inability of the former Central Imagery Office to 
influence budgets and enforce policy was often cited as the 
rationale for creating a more powerful imagery authority. 
Consistent with the recommendations of the 1992 Report 
Regarding Restructuring the Imagery Community, also known as 
the Burnett Panel report, the creation of the National Imagery 
and Mapping Agency (NIMA)--predecessor to the National 
Geospatial-Intelligence Agency--was largely intended to address 
functional management problems. The National Imagery and 
Mapping Agency Act of 1996 (Pub. L. 104-201) intended the NIMA 
to ``provide a single agency focus for the growing number and 
diverse types of customers for imagery and geospatial 
information resources within the government, to ensure 
visibility and accountability for those resources, and to 
harness, leverage, and focus rapid technological developments 
to serve the imagery, imagery intelligence, and geospatial 
information customers.'' The Committee finds, however, that the 
creation of NIMA has only marginally helped the government 
achieve these goals.
    The NIMA, and later the NGA, have made significant strides 
in managing traditional national imagery activities, for which 
they deserve praise. Furthermore, the current NGA leadership 
has notably increased its functional management efforts. 
However, despite significant increases to its budget, the NGA 
has inadequately managed the rapid developments in advanced 
geospatial intelligence, and airborne and ground-based imagery 
collection systems. For example, the acquisition of imagery-
related unmanned aerial vehicles lacked coherent central 
guidance, resulting in disparate, incompatible, and 
``stovepiped'' systems; current decisions regarding new imagery 
satellite programs have lacked strong NGA input; costly 
classified sensors were procured without adequate TPED; and no 
system exists to store ground-based imagery.
    The need for management of the nation's geospatial 
enterprise, not shortcomings in analysis, was the driving 
rationale for creating the NIMA. The Burnett Panel noted a need 
to centralize vital functions such as end-to-end planning/
management, research and development, collection, processing, 
archiving, and infrastructure, while maintaining the 
distributed nature of the imagery exploitation process to best 
support the all-source intelligence agencies. The Committee 
concurs, believing that enabling use of geospatial intelligence 
by all customers should be a key goal of NGA's functional 
management efforts.
    The Committee believes that the NGA possesses a strong 
analysis and production culture, inherited from predecessor 
organizations which formed the NIMA, but a strong functional 
management culture must be further developed. Indeed, the 
Committee is concerned that since the NIMA's creation, there 
has been a net consolidation of analysis without sufficient 
improvements to functional management.
    As a case in point, the NGA objected to legislation 
requiring the development of a system to facilitate the 
analysis, dissemination, and incorporation of imagery collected 
by ground-based platforms. Ground-based photography of known 
sites and routes is now commonplace--enabled even by cell 
phones with photographic capability--and of great use to 
military personnel or clandestine operatives. Despite NGA's 
claims that it has the needed authorities to mandate such a 
system, no such system exists. Furthermore, NGA personnel have 
stated there is no need for such a system because the data is 
of little use to NGA analysts. This view may explain the poor 
performance in establishing architectural guidance for airborne 
systems as well, since NGA analysts overwhelmingly rely on 
satellite imagery. The Committee stresses that the NGA, in its 
role as functional manager, must respond to the needs of all 
users of geospatial information, not just NGA analysts.
    The NGA, like the NIMA before it, is granted by statute, 
Defence Department Directives, and Intelligence Community 
Directives significant authorities over geospatial intelligence 
activities. Despite this, the NGA Director's ability to 
influence the geospatial-related investments of non-NGA 
entities is limited. Like the former Central Imagery Office, 
the NGA lacks the ability to enforce its policies and standards 
outside the agency, yet NGA management states that they need no 
stronger authorities.
    Since the creation of NIMA, two new positions--the Director 
of National Intelligence and the Undersecretary of Defense for 
Intelligence--have been established, both with certain 
authorities which may supplant those of the NGA. The Committee 
believes that the geospatial intelligence functional management 
authorities of the NGA should be reviewed in light of this new 
IC leadership. If strong central leadership is needed, then 
more powerful and clear authorities should be delegated to the 
organization entrusted with that role. The Committee encourages 
the NGA to review what was the founding rationale and intent 
for the NIMA, and ensure that the agency's focus is consistent 
with that intent. Further, the Committee encourages the DNI, 
Secretary of Defense, and Secretary of Homeland Security to 
review the geospatial intelligence management issue, delineate 
appropriate responsibilities and authorities, and then ensure 
that those responsibilities are met.

Resolution restrictions on commercial imagery satellites

    The national defense and intelligence communities rely on 
commercial satellite imagery for many missions. The Committee 
believes it is in the national interest to maintain U.S. 
leadership in this field, including a regulatory regime that is 
balanced between protecting national security and allowing a 
competitive U.S. industry.
    The 2003 U.S. Commercial Remote Sensing Policy directs the 
U.S. Government to ``rely to the maximum practical extent'' on 
commercial imagery providers, with a goal of ``maintaining the 
nation's leadership in remote sensing space activities.'' It 
also advises Government agencies to provide a ``responsive 
regulatory environment for licensing the operations . . . of 
commercial remote sensing space systems.''
    There is an increasing rationale to use commercial systems 
for more complex national security missions. Likewise, there is 
a growing commercial marketplace for higher-resolution imagery. 
While market conditions demand higher quality imagery, foreign 
competition is aggressively investing in more advanced imaging 
capabilities, and quickly closing the technology gap between 
themselves and U.S. providers.
    A number of foreign commercial systems--either already on 
orbit, or scheduled for launch in the next few years--provide 
comparable resolution to current U.S. commercial satellites, 
which is limited by U.S. policy. The Committee understands that 
the factors governing U.S. policies in this area include 
complex trade-offs. However, it appears obvious that the U.S. 
no longer holds a monopoly on satellite imagery.
    Satellite acquisitions take at least three years from 
contracting to launch. In order for our commercial imagery 
providers to maintain their competitiveness, they must be able 
to anticipate relaxed resolution restrictions several years in 
advance. A review of current policy restrictions with an eye 
toward more relaxed licensing agreements in the 2010 to 2011 
timeframe could allow commercial industry to procure more 
capable systems.
    The Committee encourages the harmonization of U.S. 
government regulations governing commercial remote sensing 
satellite imagery with the imagery needs of the defense and 
intelligence communities consistent with national policy and 
prudent risk management. Therefore, the Committee directs the 
DNI, in coordination with the Departments of Defense and 
Commerce, to review ground sampling distance licensing 
restrictions for U.S. commercial remote sensing space systems.

              INTELLIGENCE COMMUNITY FINANCIAL MANAGEMENT

    The Senate Select Committee on Intelligence formally began 
its quest for increased IC compliance with federal financial 
accounting standards in September 2001. The report language 
accompanying the Committee's Fiscal Year 2002 Intelligence 
authorization bill noted that as early as January 1997 the 
President had called for selected IC agencies to begin 
producing classified financial statements. The report language 
called for the financial statements of the National 
Reconnaissance Office (NRO), the National Security Agency 
(NSA), the CIA, the Defense Intelligence Agency (DIA), and what 
is now the NGA to be audited by a statutory IG or independent 
public accounting firm by March 1, 2005. The intent was that by 
this time, the statements would be auditable.
    Since September 2001 each agency has overstated its 
progress in establishing the processes, procedures, and 
internal controls that would allow for the production of 
auditable financial statements. These promises have been 
accompanied by the hiring of multiple contractors who have 
created numerous studies and plans that have often been 
duplicative and merely pointed out the obvious. There has also 
been an apparent lack of senior management attention to the 
need for improved financial accountability. This lack of 
attention was most recently exhibited when the directors of the 
five agencies mentioned above were asked to respond to 
questions raised concerning the Annual Financial Report 
submitted by their agency in November 2007. The response from 
the NSA was the only one signed by the director of the agency, 
and the CIA submitted its response over one week late with no 
explanation. The agency responses generally addressed the 
issues raised, but each lacked details on when critical 
corrective processes or new systems would be implemented while 
promising to be auditable by the DNI imposed deadline of 2012. 
Based on past history, the Committee is hesitant to accept 
these promises.
    The Committee acknowledges that there has been nominal 
progress over the last decade. The NRO produced an auditable 
financial statement in fiscal year 2003, but since then has 
slipped to the point of not doing an audit of its fiscal year 
2007 statement pending further improvements to internal 
processes. The NSA has implemented a new financial management 
system that will also support the DIA, and the CIA continues to 
upgrade its core financial system. The NGA, on the other hand, 
has still not begun implementation of a core financial system, 
and is the farthest from producing auditable financial data. 
Additionally, much of the progress to date is offset by the 
reliance on inadequate feeder systems and intensive manual 
processes to create the actual statements. The bottom line is 
that over ten years after the President called for action, and 
over three years after the Committee anticipated receiving 
auditable statements, the five agencies are still unable to 
produce an auditable financial statement and the current 
projection for doing so is at least four years away.
    The current plan for producing auditable statements is 
contained in an April 2007 DNI report titled: Financial 
Statement Auditability Plan. The report outlined the current 
state of the intelligence community's financial management 
systems, explained the challenges to achieving unqualified 
audit opinions, and specified key milestones for each agency on 
the path to clean audit opinions in fiscal year 2012. The 
report failed, however, to explain how independent audit 
assessments of important milestones would be conducted, and it 
contained no plan for when individual systems could be merged 
into a business enterprise architecture (BEA). The Committee 
had originally asked the DNI for a plan to create such an 
architecture in December 2006. Also, based on the Committee's 
research with private sector experts and a review of best 
practices elsewhere in the U.S. Government, the Committee was 
concerned that the approach outlined in the April 2007 report 
rested too heavily on past decisions and sunk costs of the 
individual agencies, and did not fully embrace the shared 
service model endorsed by the Office of Management and Budget. 
Finally, the Committee was concerned that the proposal for 
clean audit opinions by 2012 did not convey a sense of urgency.
    The Committee was particularly interested in the ODNI 
producing the follow-on study referenced in the April 2007 
report. The follow-on study was to include a determination on 
the feasibility of incorporating the IC's financial management 
domain into a BEA. Report language that accompanied the 
Committee's fiscal year 2008 intelligence authorization bill 
specifically requested that the follow-on study include an 
impartial evaluation of the following: DNI authorities to 
enforce compliance with federal financial accounting standards; 
the most cost effective system solution and the 
responsibilities of the Intelligence Community's Chief 
Information Officer in overseeing pursuit of that solution; and 
the findings of recent IC information technology assessments 
and IG reports.
    The Committee originally intended for the results of the 
follow-on study to be received by December 1, 2007, but after 
further discussion with industry experts and the House 
Permanent Select Committee on Intelligence, the report due date 
was deferred until March 31, 2008, to allow for the creation of 
a meaningful product. Ultimately, the report was received 
nearly two weeks late and failed to cover a number of issues 
requested by the Committee. The report proposes to address many 
of the most critical issues in a separate report to be produced 
by September 30, 2008. While the turnover of senior financial 
personnel within the ODNI delayed production of the report, it 
is clear that the task received inadequate attention during the 
time available. More importantly, the lack of action further 
delays meaningful independent oversight of the efforts of the 
agencies to achieve auditable financial statements.
    While the Committee is resigned to allowing the DNI's new 
financial managers time to produce the required solutions to 
the IC's financial accountability issues, it can no longer wait 
for meaningful independent confirmation that the current 
actions of the agencies will lead to the internal controls 
necessary to produce auditable financial statements. Therefore, 
the Committee directs the DNI to submit a proposal by December 
1, 2008, outlining how independent assessments of agency 
efforts to improve and report on their financial management 
practices, and comply with the Financial Statement Auditability 
Plan, will be conducted. The simple step of independent 
verification, which should be conducted by the appropriate IG 
or by an independent public accountant, will alleviate the 
current creditability problems regarding the content of an 
agency's Annual Financial Reports. Further, in order to ensure 
greater transparency, the Committee requests that all audit 
opinions concerning elements of the IC be posted annually on 
the DNI's unclassified Web site. The Web site should have a 
menu that lists all of the elements of the IC, whether they are 
evaluated as stand-alone agencies or as part of a larger agency 
or department, and a corresponding rating of ``unqualified,'' 
``qualified,'' ``adverse,'' ``disclaimer,'' or ``not conducting 
an audit.''
    Finally, the Committee believes that both the Congress and 
the DNI would benefit from the creation of a consolidated NIP 
financial statement. Such a statement would provide valuable 
macro-level data and, once established, offer insight into 
financial trends within the IC. Therefore, the Committee 
requests that the DNI begin preparing a consolidated financial 
statement for the NIP beginning with fiscal year 2010. In 
accordance with the DNI's Financial Statement Auditability 
Plan, this statement should be based on the fully auditable 
data provided by each of the IC agencies by fiscal year 2012. 
As such, a separate audit will not be required for the 
consolidated statement.

Chief Financial Officer for the Intelligence Community

    It is widely recognized that the IC's process for 
generating requirements for major acquisitions is broken. For 
instance, about 70 percent of current major acquisition 
programs currently have no formally validated requirements. 
Moreover, the requirements process, like the Intelligence 
Collection Architecture, is inadequately linked to realistic, 
long-term budgetary constraints. This has been confirmed by 
ODNI commissioned studies and in-house analysis. Too often, 
these ``front end'' resource allocation activities involve no 
prioritization, and result in the Chief Financial Officer (CFO) 
in the ODNI receiving funding requests that do not fit within 
the available budget and are not accompanied by an associated 
budget cut to an existing program. One such example is 
described in the Classified Annex to this report. To remedy 
this situation, budgetary constraints need to be explicitly 
considered throughout the entire resource process. In addition, 
the CFO, whose responsibility it is to prepare a budget for the 
DNI, needs to be centrally involved throughout the entire 
decision-making process--not just the budgeting at the end of 
the process.
    By the ODNI's own assessment, the current resource 
management process is ``fragmented, unsynchronized, complex, 
and opaque.'' A prominent feature of the DNI's 500 Day Plan is 
to address this problem by devising an end-to-end process to 
synchronize strategic planning, requirements generation, 
architecture work, programming, budgeting, and performance 
management. The Committee has received briefings from the ODNI 
that make clear this project, referred to as the ``Strategic 
Enterprise Management'' (SEM) initiative, is a serious effort, 
but is not close to achieving its objective. Indeed, it appears 
that the SEM initiative will not be fully operational until the 
fiscal year 2011 budget, should the effort survive in the next 
administration.
    The Committee applauds the DNI for undertaking the SEM 
initiative, but believes that it requires concerted attention 
by ODNI leadership. Even with that attention, unless one senior 
officer is exclusively in charge of end-to-end resource 
management, resource decisions will continue to be slow, 
needlessly complex, subject to contentious revisits, and 
certainly not integrated. Further, the Committee believes that 
the DNI's most potent authority--budgetary control--is not 
adequately reflected in the ODNI's organizational structure. 
Accordingly, for the SEM initiative and budgetary control to be 
effectively executed, the ODNI's organizational structure 
warrants change.
    Therefore, Section 408 of the bill creates the position of 
the Chief Financial Officer of the Intelligence Community (IC 
CFO), investing that position with the duties, 
responsibilities, and authorities of the CFO Act of 1990, as 
appropriate. The section makes clear that the IC CFO will serve 
as the principal advisor to the DNI on IC budgetary resources, 
and that this officer will establish and oversee a 
comprehensive and integrated strategic process for managing IC 
resources. Other senior officers may be primarily responsible 
for certain aspects of this overall process, such as strategic 
planning or acquisition milestone decision authority, but 
Section 408 makes the IC CFO responsible for the over-all 
operation and coordination of all resource processes. The 
Committee intends and expects that, as the principal advisor to 
the DNI on resource allocation, the IC CFO will consider and 
balance the equities of all IC parties in his or her 
recommendations to the DNI and PDDNI, and that they, in turn, 
will receive recommendations directly from the IC CFO.

Independent Cost Estimation

    The more of the budget that is subjected to the discipline 
of an Independent Cost Estimate (ICE) or other independent cost 
assessment, the more realistic and sustainable it will be. 
Therefore, the bill, by changing the definition of ``major 
system'' in provisions of the National Security Act of 1947 
related to major system acquisitions (e.g., Section 316) 
reduces the cost threshold for when a program requires an ICE, 
and when it must be budgeted to an ICE, from $500 million to 
about $170 million.
    This threshold is used throughout the U.S. government to 
define a major system acquisition, and its adoption in the bill 
responds to the ODNI's request to make this definition uniform 
in statute. The Committee anticipates that the ODNI's 
Intelligence Community Cost Analysis and Improvement Group (IC 
CAIG) will delegate many of the resulting additional ICEs for 
smaller programs to those executing agencies with independent 
cost estimating capabilities. The Committee also strongly 
encourages the IC CAIG to continue to expand its purview to 
large programs that are not usually considered ``systems 
acquisition,'' such as IC data centers, the pending cyber 
initiative, and large personnel increases that function 
together to fulfill a mission need.
    Since these increased IC CAIG duties will require 
additional personnel, some with a new and different skill set 
than current professional cost estimators, the classified annex 
of the bill provides additional personnel without increasing 
the ODNI total.
    Also, while the Committee is impressed with the 
professionalism and productivity of the IC CAIG, it believes it 
is incumbent on the IC CAIG to establish and publish the track 
record of its ICEs in predicting actual program costs. This is 
especially important given how critical these ICEs have become 
in guaranteeing budget reality.
    Accordingly, the Committee requests the ODNI to include in 
each President's Budget, or in each annual Program Management 
Report, a comparison of all IC CAIG ICEs to the actual costs of 
completed and on-going programs. The comparison will be on a 
basis that is consistent from year to year and from program to 
program, and which is a good measure of cost estimating 
fidelity. Such a comparison may account for changes in program 
scope, but it must also compare estimates to actual costs 
without scope changes. The Committee recommends that the IC CFO 
consult with the Committee on its proposed methodology for 
establishing such a track record prior to its publication in 
the President's Budget.
    Additionally, to guarantee both continued objectivity and 
seamless linkage to the budget process, the Committee believes 
that the ODNI CAIG should continue to report to the ODNI CFO 
and should not be realigned to any other part of the 
organization without prior written notification of the 
Intelligence Committees. Therefore, should the DNI contemplate 
moving the CAIG outside the office of the CFO, he should notify 
the Committee no later than 60 days prior to the contemplated 
move.
    Finally, the Committee understands that the Office of the 
Chief Financial Officer of the CIA has added personnel to 
conduct cost estimates for CIA programs and projects, but that 
the process for conducting cost estimates remains ad hoc. There 
is not a threshold amount above which a cost estimate is 
required or a requirement that cost estimates occur before a 
project is underway.
    The Committee requests that the Associate Deputy Director 
of the CIA establish clear guidelines for the conduct of cost 
estimates for agency acquisitions. This guidance should include 
the requirement that the CFO conduct a cost estimate for any 
construction or acquisition project likely to exceed $15 
million.

Performance Based Budgeting: Accounting and accountability for results

    The DNI seeks to instill in the IC ``an execution 
culture'', meaning that carrying through on intention is what 
really counts and performance is ``Job Number One''. The 
Committee applauds this overdue goal. Too often, senior 
officials appear more concerned with the accretion of dollars 
and positions than with the performance they are charged to 
achieve with these resources. Performance-based budgeting is 
critical to reversing these priorities and bringing about the 
execution culture the DNI seeks. Performance budgeting also 
holds great promise for making government more transparent and 
efficient.
    The IC's resource management, like that in many parts of 
the government, is fixated on inputs--the dollars and people it 
seeks from Congress. Government accounting lays out these 
inputs in great detail across a myriad of categories. However, 
there is scant accounting for outcomes. And where accounting 
does not exist, neither can true accountability. Rarely can the 
IC express in clear, concrete terms the performance results 
expected from its requested funding, or the real results from 
actual expenditures.
    Consequently, Congress is routinely asked to authorize and 
appropriate billions of dollars for programs and activities 
whose criteria for success or failure the Administration cannot 
even venture. The presidential directive to increase HUMINT by 
50 percent and major elements of the Comprehensive National 
Cybersecurity Initiative are but two prominent examples in the 
FY 2009 budget. We have accordingly made significant 
adjustments to these requests, which are detailed in the 
Classified Annex.
    Performance-based budgets are admittedly difficult. But 
when done well, they will permit us to know whether, and to 
what degree, our investments will be judged successful. We will 
also discover how requested dollars are linked to expected 
performance. Aside from these accountability and transparency 
benefits, such linkages permit efficiency measures, which in 
turn, will enable us to achieve greater efficiency. This is 
always in the public interest, but it will be imperative if the 
IC is to accomplish its missions if budgets no longer increase 
year after year.

Performance Based Budgeting: Major progress made in FY 2009 budget

    This year's FY 2009 NIP budget makes great progress towards 
a performance-based budget. It represents the first rigorous 
attempt to account for results in a significant portion of the 
budget. Even so, the DNI and the IC are years behind much of 
the rest of the government. The FY 2009 budget makes genuine 
headway in three areas:
      First, it constructs a complete performance-based 
budget for the DNI's Mission Objective #2--Counter 
Proliferation. Outcome measures were clear, meaningful, and 
measurable; baselines and targets appear largely solid; and 
dollars are explicitly linked to mission performance. This work 
will serve as the model for constructing a performance budget 
in the other four Mission Objectives. While some of these 
mission objectives may change with a new DNI or new 
administration, the analytical performance model will 
nonetheless be applicable to any new mission area.
      Second, it lays the foundation for a NIP-wide 
performance-based budget in the ``Budget Categories.'' These 
are the seven functional categories based on the intelligence 
cycle, which are meant to be enduring and should not change in 
a new administration. The Committee judged most measures to be 
useful, but found measures in the Research and Technology 
Budget Category to be very weak. Nonetheless, the yearly 
performance measures for Budget Categories should yield high-
level information on the health of intelligence, which should 
help guide future investment decisions.
      Third, many of the budgets of the NIP components 
have made progress at the ``Expenditure Center'' level of 
detail. This progress should also endure a change of 
administration, as Expenditure Centers are derived from the 
Budget Categories. However, the measures in this budget are of 
highly uneven quality across and within individual NIP 
components; thus, much work remains.

Performance Based Budgeting: Counterterrorism and other missions lag 
        counter proliferation

    For the most part, the performance budget for counter 
proliferation is a good model for the other Mission Objectives. 
Owing to the clarity and accountability of Mission Objective 
2's performance-based budget, the Committee has favored the 
administration's request for counter proliferation. We find 
that the benefit of doubt can shift in favor of the request 
when we are confident we will be able to make future budgetary 
adjustments--up or down--based on relevant, measurable 
performance.
    Counterterrorism stands in stark contrast. One of this 
Mission Objective's two outcome measures is not constructed in 
a way that lends itself to meaningful targets. There are no 
baselines, no targets, and no explicit linkage of dollars to 
results. This is very disappointing, given that 
counterterrorism is the number one mission priority and that 
the FBI had already produced a workable performance budget for 
its counter-terrorism activities.
    While the Committee has authorized a robust 
counterterrorism budget, we remain concerned with fuzzy 
accounting for results and with uncertain accountability. To 
further the DNI's efforts to instill a culture of execution in 
its top mission priority, the Committee has fenced certain 
funding in the National Counterterrorism Center, pending 
receipt of a Mission Objective 1 performance budget whose rigor 
and clarity is comparable to that of Mission Objective 2's.
    The performance-based budgets for the DNI's other mission 
objectives--support democracy, hard target penetration, and 
early warning--are generally even weaker than for 
counterterrorism. However, the Committee believes that 
performance work in these areas should be the lowest priority, 
as they appear the least likely to endure a change in 
administration. Also, the Committee urges the DNI to be 
judicious in keeping all performance measures to a manageable 
number of key metrics, as each comes with an administrative 
tail of monitoring, targeting, and reporting. Quality matters 
here, not quantity.
    The Committee expects to receive next year the full 
performance budget promised by the DNI for FY 2010. It will be 
prepared to withhold or reduce its authorization levels to the 
extent this promise is not fulfilled.

Intelligence Community records

    The Chief Information Officer of the Intelligence Community 
is tasked with managing activities relating to the information 
technology architecture of the Intelligence Community, 
including the retention and disposal of Intelligence Community 
records. The Committee is concerned that current policies 
within the Intelligence Community, as well as current statutory 
requirements, may not encourage appropriate retention of 
Intelligence Community records that would otherwise be useful 
to the Intelligence Community, the Department of Justice, or 
the Congress in furtherance of their duties related to elements 
of the Intelligence Community or its personnel.
    The Committee therefore directs that the Chief Information 
Officer identify specific classes of Intelligence Community 
records that should be retained for such purposes. The Chief 
Information Officer shall specify whether current retention or 
disposal practices are attributable to Intelligence Community 
policies and procedures or to statutory requirements. The Chief 
Information Officer shall report such findings to the 
congressional intelligence committees no later than December 
31, 2008.

Compliance with Senate Rule XLIV

    The following list of congressionally directed spending 
items included in the classified annex is submitted in 
compliance with rule XLIV of the Standing Rules of the Senate, 
which requires publication of a list of congressionally 
directed spending items.
    A provision adding $200,000 for an Intelligence Training 
Program run by the Kennedy School of Government. The provision 
was added at the request of Senator Rockefeller.
    A provision adding $2.0 million for biometric research. 
This provision was added at the request of Senator Rockefeller.
    A provision directing $3.5 million to the Naval 
Oceanographic Command. This provision was added at the request 
of Senator Wicker.
    A provision adding $3.5 million for littoral net centric 
operations. This provision was added at the request of Senator 
Rockefeller.
    A provision adding $5.5 million for the Space Lab at Utah 
State University. This provision was added at the request of 
Senator Hatch.
    A provision adding $10.4 million for the National Media 
Exploitation Center. This provision was added at the request of 
Senator Rockefeller.
    The bill and classified annex contain no limited tax 
benefits or limited tariff benefits, as defined by Section 103 
of S. 1.

                            COMMITTEE ACTION

Vote to report the committee bill

    On May 1, 2008, a quorum for reporting being present, the 
Committee voted to report the bill subject to amendments, by a 
vote of 10 ayes and 5 noes. The votes in person or by proxy 
were as follows: Chairman Rockefeller--aye; Senator Feinstein--
aye; Senator Wyden--aye; Senator Bayh--aye; Senator Mikulski--
aye; Senator Feingold--aye; Senator Nelson--aye; Senator 
Whitehouse--aye; Vice Chairman Bond--no; Senator Warner--no; 
Senator Hagel--aye; Senator Chambliss--no; Senator Hatch--no; 
Senator Snowe--aye; Senator Burr--no.

Votes on amendments to committee bill, this report and the classified 
        annex

    On April 29, 2008, by a vote of 9 ayes to 6 noes, the 
Committee adopted an amendment of Senator Feinstein, Senator 
Whitehouse, Chairman Rockefeller, Senator Feingold, Senator 
Wyden, Senator Hagel, Senator Snowe and Senator Mikulski, 
(Section 321) to prohibit the use of any treatment or technique 
of interrogation not authorized by the U.S. Army Field Manual 
on Human Intelligence Collector Operations on any individual in 
the custody or under the effective control of personnel of an 
element of the intelligence community. The votes on the 
amendment in person or by proxy were as follows: Chairman 
Rockefeller--aye; Senator Feinstein--aye; Senator Wyden--aye; 
Senator Bayh--no; Senator Mikulski--aye; Senator Feingold--aye; 
Senator Nelson--aye; Senator Whitehouse--aye; Vice Chairman 
Bond--no; Senator Warner--no; Senator Hagel--aye; Senator 
Chambliss--no; Senator Hatch--no; Senator Snowe--aye; Senator 
Burr--no.
    On April 29, 2008, by a voice vote, the Committee agreed to 
an amendment by Senator Burr (an amendment to Section 335) to 
repeal or modify certain additional reporting requirements.
    On April 29, 2008, by a voice vote, the Committee agreed to 
an amendment by Senator Wyden to authorize an additional amount 
of funding for information technology within the Federal Bureau 
of Investigation to ensure desktop access to the Internet as 
further described in the classified annex to the Schedule of 
Authorizations.
    On April 29, 2008, after agreeing by a voice vote to a 
second degree amendment by Senator Burr to set a five-year 
sunset, the Committee agreed by an amendment by Senator Snowe 
(Section 333) to require the Director of National Intelligence, 
in coordination with the Director of the Federal Bureau of 
Investigation, to establish performance metrics and specific 
timetables related to the FBI carrying out certain matters 
related to intelligence and national security and to report to 
the congressional intelligence committees on a semi-annual 
basis concerning the FBI's progress in improving its 
performance.
    On April 29, 2008, by a voice vote, the Committee agreed to 
an amendment by Vice Chairman Bond (Section 348) to modify the 
officials that may be designated to certify that an FBI 
undercover operation is designed to collect foreign 
intelligence or counterintelligence.
    On April 29, 2008, after agreeing by a vote of 14 ayes to 1 
no to a second degree amendment offered by Senator Mikulski, 
the Committee agreed by voice vote to an amendment by Senator 
Feingold to direct the DNI to provide certain documents and 
answers to Committee questions related to privacy and civil 
liberties, budget assessments, and implementation plans and to 
prohibit the obligation of certain funds pertaining to elements 
of the Comprehensive National Cybersecurity Initiative until 
such documents and answers are received by the congressional 
intelligence committees. The votes on the second degree 
amendment in person or by proxy were as follows: Chairman 
Rockefeller--aye; Senator Feinstein--aye; Senator Wyden--aye; 
Senator Bayh--aye; Senator Mikulski--aye; Senator Feingold--no; 
Senator Nelson--aye; Senator Whitehouse--aye; Vice Chairman 
Bond--aye; Senator Warner--aye; Senator Hagel--aye; Senator 
Chambliss--aye; Senator Hatch--aye; Senator Snowe--aye; Senator 
Burr--aye.
    On April 29, 2008, by a voice vote, the Committee agreed to 
an amendment by Chairman Rockefeller and Vice Chairman Bond (to 
Section 316) to require certain reports and findings when a 
major system acquisition is estimated to cause an increase to 
these future budget projections and to include certain comments 
in the report to accompany the bill.
    On April 29, 2008, by a vote of 8 ayes to 7 noes, the 
Committee adopted an amendment of Vice Chairman Bond (Section 
345) to limit the reprogramming and transfer of funds if a 
congressional intelligence committee requests additional 
information on such activity to a date specified by such 
congressional intelligence committee up to 90 days after the 
date of the request. The votes on the amendment in person or by 
proxy were as follows: Chairman Rockefeller--no; Senator 
Feinstein--no; Senator Wyden--no; Senator Bayh--no; Senator 
Mikulski--no; Senator Feingold--aye; Senator Nelson--no; 
Senator Whitehouse--no; Vice Chairman Bond--aye; Senator 
Warner--aye; Senator Hagel--aye; Senator Chambliss--aye; 
Senator Hatch--aye; Senator Snowe--aye; Senator Burr--aye.
    On April 29, 2008, by a voice vote, the Committee agreed to 
an amendment by Senator Whitehouse, Chairman Rockefeller, 
Senator Hagel, Senator Feinstein, and Senator Feingold (Section 
323) to prohibit the use of funds authorized by the bill to 
detain any individual under the effective control of an element 
of the intelligence community if the International Committee of 
the Red Cross is not provided notification of the detention of 
and access to the individual.
    On April 29, 2008, by a vote of 9 ayes to 6 noes, the 
Committee adopted an amendment by Senator Feinstein, Chairman 
Rockefeller, Senator Feingold, and Senator Whitehouse (Section 
322) to prohibit the Director of the Central Intelligence 
Agency from permitting a contractor or subcontractor of the CIA 
to carry out an interrogation of an individual and to require 
that all interrogations be carried out by employees. The votes 
on the amendment in person or by proxy were as follows: 
Chairman Rockefeller--aye; Senator Feinstein--aye; Senator 
Wyden--aye; Senator Bayh--aye; Senator Mikulski--aye; Senator 
Feingold--aye; Senator Nelson--aye; Senator Whitehouse--aye; 
Vice Chairman Bond--no; Senator Warner--no; Senator Hagel--aye; 
Senator Chambliss--no; Senator Hatch--no; Senator Snowe--no; 
Senator Burr--no.
    On April 29, 2008, by a voice vote, the Committee agreed to 
an amendment by Senator Whitehouse pertaining to an activity 
described in the classified annex to the Schedule of 
Authorizations.
    On May 1, 2008, by a vote of 10 ayes to 5 noes, the 
Committee adopted an amendment by Senator Feingold and Senator 
Hagel (Title V) to establish the Foreign Intelligence and 
Information Commission to assess needs and provide 
recommendations to improve foreign intelligence and information 
collection, analysis, and reporting. The votes on the amendment 
in person or by proxy were as follows: Chairman Rockefeller--
aye; Senator Feinstein--aye; Senator Wyden--aye; Senator Bayh--
aye; Senator Mikulski--aye; Senator Feingold--aye; Senator 
Nelson--aye; Senator Whitehouse--aye; Vice Chairman Bond--no; 
Senator Warner--no; Senator Hagel--aye; Senator Chambliss--no; 
Senator Hatch--no; Senator Snowe--aye; Senator Burr--no.
    On May 1, 2008, by a voice vote, the Committee adopted an 
amendment to the classified annex by Senator Chambliss to 
prohibit the obligation of funds for any covert action finding 
reported to congressional staff in addition to the staff 
directors of the congressional intelligence committees until 
the finding of such program has been briefed to the full 
membership of the congressional intelligence committees.
    On May 1, 2008, by a voice vote, the Committee adopted an 
amendment by Senator Feinstein and Senator Feingold (Section 
331) to require a report from the Director of National 
Intelligence that describes any activity that is being 
conducted by one or more contractors that the DNI believes 
should only be conducted by U.S. government employees, an 
estimate of the number of the contractors conducting each such 
activities, and the plan of the DNI, if any, to have each 
activity conducted by U.S. government employees.
    On May 1, 2008, by a vote of 10 ayes to 5 noes, the 
Committee adopted an amendment by Senator Feinstein and Senator 
Feingold (Section 332 and Section 344) on (a) notifications to 
the congressional intelligence committees under Sections 502 
and 503 of the National Security Act and (b) the availability 
of funds under Section 504 of that Act. The votes on the 
amendment in person or by proxy were as follows: Chairman 
Rockefeller--aye; Senator Feinstein--aye; Senator Wyden--aye; 
Senator Bayh--aye; Senator Mikulski--aye; Senator Feingold--
aye; Senator Nelson--aye; Senator Whitehouse--aye; Vice 
Chairman Bond--no; Senator Warner--no; Senator Hagel--aye; 
Senator Chambliss--no; Senator Hatch--no; Senator Snowe--aye; 
Senator Burr--no.
    On May 1, 2008, by a vote of 14 ayes to 1 no, the Committee 
adopted an amendment by Chairman Rockefeller to the classified 
annex to include findings of the Committee's HUMINT Review 
Group. The votes on the amendment in person or by proxy were as 
follows: Chairman Rockefeller--aye; Senator Feinstein--aye; 
Senator Wyden--aye; Senator Bayh--aye; Senator Mikulski--aye; 
Senator Feingold--aye; Senator Nelson--aye; Senator 
Whitehouse--aye; Vice Chairman Bond--aye; Senator Warner--no; 
Senator Hagel--aye; Senator Chambliss--aye; Senator Hatch--aye; 
Senator Snowe--aye; Senator Burr--aye.
    On May 1, 2008, by a voice vote, the Committee adopted a 
substitute amendment by Vice Chairman Bond (to Section 401 
which authorizes the DNI to conduct accountability reviews of 
elements of the Intelligence Community and the personnel of 
such elements). The substitute amendment additionally requires 
that the head of an element of the Intelligence Community who 
makes a determination not to implement a DNI recommendation for 
corrective or punitive action in relation to a failure or 
deficiency within the Intelligence Community submit a notice of 
such determination to the congressional intelligence 
committees.
    On May 1, 2008, by voice vote, the Committee adopted an 
amendment by Vice Chairman Bond to the report to accompany the 
bill to include a section on Intelligence Community records.

                           ESTIMATE OF COSTS

    Pursuant to paragraph 11(a)(3) of rule XXVI of the Standing 
Rules of the Senate, the Committee deems it impractical to 
include an estimate of the costs incurred in carrying out the 
provisions of this report due to the classified nature of the 
operations conducted pursuant to this legislation. On May 8, 
2008, the Committee transmitted this bill to the Congressional 
Budget Office and requested it to conduct an estimate of the 
costs incurred in carrying out its provisions.

                    EVALUATION OF REGULATORY IMPACT

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee finds that no 
substantial regulatory impact will be incurred by implementing 
the provisions of this legislation.

                        CHANGES IN EXISTING LAWS

    In the opinion of the Committee, it is necessary to 
dispense with the requirements of paragraph 12 of rule XXVI of 
the Standing Rules of the Senate in order to expedite the 
business of the Senate.

            ADDITIONAL VIEWS OF SENATORS FEINGOLD AND HAGEL

    During consideration of the Fiscal Year 2009 Intelligence 
Authorization bill, the Committee supported an amendment we 
offered to establish an independent commission to examine how 
the United States government gathers information it needs to 
defend our national security and further our foreign policy 
goals. The commission will address long-standing impediments to 
effective overseas collection and strategic analysis. First, as 
the Director of National Intelligence has testified, the 
Intelligence Community devotes ``disproportionate'' resources 
toward current crises, rather than strategic challenges and 
emerging threats. Second, the Intelligence Community has not 
established the ``global reach'' needed to anticipate those 
over-the-horizon threats. And, third, the government lacks 
interagency collection strategies that include not only the 
Intelligence Community, but also non-clandestine information 
gathering, particularly by the Department of State. As the 
Acting Director of the National Counterterrorism Center has 
testified, diplomatic reporting is ``absolutely critical'' for 
understanding conditions that can result in the emergence of 
new terrorist safe havens and can at times be more effective in 
obtaining information related to that threat than the 
Intelligence Community.
    To fully and effectively utilize all the collection tools 
at its disposal, the United States government must develop an 
interagency strategy that considers first what information it 
needs, not only currently but in the future, and second who is 
best positioned to obtain that information. It must then 
translate that strategy into resource allocations, reflected in 
budget requests and in the mix of personnel at the country 
mission level. The commission will consider impediments to an 
effective, coordinated interagency collection strategy and make 
recommendations to the Congress and the executive branch.
    The Director of National Intelligence has discussed the 
necessity for at least some analysts to be focused on the 
unknown threats over the horizon--not just the threats we face 
today. The commission will also review how well positioned our 
analytical capabilities are to focus not only on current 
threats but also on future or emerging threats, in order to 
avoid strategic surprise.
    The commission's mandate extends beyond the Intelligence 
Community, covering the State Department and other departments 
and agencies whose reporting contributes to the government's 
overall understanding of international affairs, as well as the 
interagency budgetary process. That mandate is thus broader 
than the authorities of the Director of National Intelligence 
as well as the jurisdiction of the Committee or any other 
congressional committee. We anticipate, however, that the 
recommendations of the commission will prove extremely 
beneficial to effective congressional oversight of the 
Intelligence Community, and will contribute to a broader United 
States government effort to understand the world and defend our 
national security interests.
    We are pleased that the commission has been supported by 
prominent foreign policy and intelligence experts, including 
Zbigniew Brzezinski, Donald Gregg, Larry Wilkerson, Carl Ford, 
Gayle Smith, David Kay, and Rand Beers.

                                   Russell D. Feingold.
                                   Chuck Hagel.

                  ADDITIONAL VIEWS OF SENATOR FEINGOLD

    In addition to an amendment I offered with Senator Hagel to 
establish an independent commission to review intelligence and 
foreign information collection, the Fiscal Year 2009 
Intelligence Authorization bill and the accompanying classified 
annex include numerous important provisions.
    Foremost is the Committee's bi-partisan approval of an 
amendment I co-sponsored that would end all interrogations not 
in compliance with the Army Field Manual. It has long been my 
position that the CIA interrogation program is morally and 
legally untenable and is not making our country any safer. 
Congress's effort to end this Administration's use of 
``enhanced interrogation techniques'' as part of the Fiscal 
Year 2008 authorization bill was historic. Notwithstanding the 
veto of that legislation, the Committee is right to continue to 
insist on interrogation policies that are consistent with our 
principles as well as with our national security. I was also 
pleased to co-sponsor an amendment prohibiting CIA contractors 
from carrying out interrogations.
    The bill includes another important amendment I co-
sponsored requiring notification of and access by the ICRC to 
all detainees. At a time when there is global anger against our 
country because of this administration's indifference to 
international law, this amendment is not only humane and just, 
but will help mitigate the damage that the secret CIA detention 
program has done to our national security.
    I was also extremely pleased that the Committee approved an 
amendment I co-sponsored again this year requiring that all 
members of the Committee be given some information about 
intelligence programs that have been limited to the ``Gang of 
Eight.'' From the President's warrantless wiretapping program 
to the CIA detention and interrogation program, members of the 
Committee have been denied access to information they need to 
conduct effective oversight. This amendment will help bring 
those abuses to an end.
    Many other provisions of the bill provide important support 
for our nation's intelligence activities, while promoting 
reform and accountability. Among them is an amendment I offered 
limiting funding for elements of the Comprehensive National 
Cybersecurity Initiative pending receipt of documents and 
answers to Committee questions related to privacy and civil 
liberties, budget assessments, and implementation plans.
                                               Russell D. Feingold.

                 ADDITIONAL VIEWS OF SENATOR WHITEHOUSE

    If we go down the corridors of history and survey the evil 
practices of tyrant regimes, we would find that one of their 
most notorious methods of coercion and subjugation is holding 
prisoners incommunicado. This Committee has sought to address 
this issue in this intelligence authorization bill.
    Specifically, the Committee passed by voice vote an 
amendment that I offered, cosponsored by Chairman Rockefeller 
and Senators Hagel, Feinstein, and Feingold, that would require 
that detainees held by any element of the United States 
Intelligence Community be made available to the International 
Committee of the Red Cross (ICRC) on the same terms on which 
they are required to be made available when they are held by 
the United States military. These terms recognize the secure 
confidentiality respected by the ICRC, and allow necessary 
flexibility based on military necessity.
    This provision is consistent with and central to the 
fundamental premise of international law that no one should be 
detained beyond the bounds of the law. A seminal text on this 
subject, ``The Treatment of Prisoners under International 
Law,'' describes ``the prohibition of incommunicado detention'' 
as among ``the most central'' of all recognized international 
detainee safeguards.
    This safeguard has long been honored and advocated by the 
United States military, which has recognized that the ICRC is 
``presumptively authorized [to have] access to detainees.'' The 
U.S. military notes this access ``is based on the special role 
established by international law for the ICRC to monitor 
compliance with the law of war.'' When U.S. armed forces 
personnel have been detained, the United States has argued for 
prompt access. President George W. Bush reacted when our Navy 
patrol aircraft was forced to land in China after a mid-air 
collision by saying that, ``[t]he first step should be 
immediate access by our embassy personnel to our crew 
members.'' He continued, ``I call on the Chinese government to 
grant this access promptly.'' The United States has been a 
strong advocate opposing ``disappearances'' on a worldwide 
basis. U.S. law has long prohibited assistance to any 
government which engages in a consistent pattern of gross 
violations of internationally-recognized human rights, 
including ``prolonged detention without charges, causing the 
disappearance of persons by the abduction and clandestine 
detention of those persons[.]'' Just last month, the U.S. 
Department of State, in its annual human rights report, 
criticized the governments of North Korea, Burma and Sri Lanka 
for engaging in ``disappearances.''
    Moreover, prohibiting incommunicado detention has been a 
bipartisan endeavor. In 2005, Senator John McCain advocated a 
requirement for ICRC access across the board for all military 
detainees in Senate Amendment No. 1557, cosponsored by Senator 
John Warner, among others, to S. 1042, the National Defense 
Authorization Act of Fiscal Year 2006. As Senator McCain said 
in 2004: ``We distinguish ourselves from our enemies by our 
treatment of our enemies.
    Were we to abandon the principles of wartime conduct to 
which we have freely committed ourselves, we would lose the 
moral standing that has made America unique in the world.''
    The tradition and moral authority of this goes all the way 
back to the Gospel according to Matthew, Chapter 25, verses 36-
40. ``I was naked and you clothed me. I was sick and you 
visited me. I was in prison and you came to me.'' This applies 
even to those who are, to quote Matthew again, ``the least of 
our brethren.''
    The international standard for detention of detainees in 
armed conflicts is the access of the International Committee of 
the Red Cross. It is simply a matter of human decency, and I am 
gratified that the Committee chose to apply this standard to 
detentions by the U.S. intelligence community, just as it 
applies to the military.

                                                Sheldon Whitehouse.

                   ADDITIONAL VIEWS OF SENATOR SNOWE

    After successfully passing an Intelligence Authorization 
Bill for twenty-seven consecutive years, it is unconscionable 
that Congress has failed to pass a bill for the past three. At 
a time when our nation is bogged down in Iraq, a National 
Intelligence Estimate has concluded that Al Qaeda is driven by 
an undiminished intent to attack the Homeland and has 
regenerated key elements of its homeland attack capability, and 
costly intelligence programs have been marked by overruns, it 
is time that the Congress reassert itself as the constitutional 
check to the Executive Branch and pass an intelligence 
authorization bill to provide policy guidance and set funding 
levels for the entire intelligence community. This bill is 
undoubtedly a step toward greater transparency and 
accountability that is long overdue.
    Importantly, this bill includes a provision that would 
create an inspector general of the entire intelligence 
community. The inspector general provision is based upon a bill 
that I introduced in 2004. I believe that one key way to 
prevent the same mistakes from happening again is to inject 
more accountability into the Intelligence Community, and it is 
my hope that by creating a sound, strong, and aptly-equipped 
Inspector General, we will achieve this goal.
    The language pertaining to the inspector general provision 
has broad bi-partisan support. There are indeed some 
contentious provisions in the Intelligence Authorization bill--
but this is not one of them. Amazingly, our Intelligence 
Community still does not have an independent Senate-confirmed 
inspector general who can initiate and conduct investigations 
of elements within its ranks, despite the systemic failures of 
both 9/11 and Iraq WMD. According to the Inspector General Act 
of 1978, an inspector general looks independently at problems 
and possible solutions, yet the current construct of the Office 
of Inspector General of the Office of the Director of National 
Intelligence does not allow the Inspector General to 
investigate the various elements within the Intelligence 
Community. How can an Inspector General be expected to do his 
or her job without the right to investigate the various 
elements?
    As a member of the Intelligence Committee, I have been at 
the vanguard of countless investigations, reports and debates 
on intelligence community practices. Too many incidents of 
failure to prevent attacks, to properly collect the necessary 
intelligence, to adequately analyze that intelligence, and to 
share information within the community beg for better 
accountability in the entirety of the community. An Inspector 
General of the intelligence community who can look across the 
intelligence landscape will help improve management, 
coordination, cooperation, and information sharing among the 
agencies--the current construct does not get the job done! The 
Inspector General of the Intelligence Community, which is 
included in this bill, will have subpoena power and the ability 
to investigate current issues within the Intelligence 
Community--to identify problem areas and find the most 
efficient and effective business practices required to ensure 
that critical deficiencies can be addressed before it is too 
late--before we have another intelligence failure.
    We must ensure that an Inspector General, with community-
wide powers and a mandate to bring accountability, is part and 
parcel of the future if we are to establish an intelligence 
apparatus equal to the new challenges of 21st century threats.
    Significantly, the bill also includes a provision that I 
introduced and which was passed by a voice vote that would 
accelerate the intelligence transformation at the FBI, as the 
FBI has yet to make the dramatic changes necessary to address 
the threats facing our nation. The amendment would require the 
Director of National Intelligence (DNI) to coordinate with the 
FBI to establish performance metrics and specific timetables 
and submit to Congress a semi-annual report evaluating the 
timetables, corrective actions, and activities necessary to 
ensure the FBI is improving its performance.
    In December 2005, the 9/11 Commissioners offered their 
final report on intelligence reform and gave the FBI a ``C''. 
The report stated:

          Progress is being made--but it is too slow. The FBI's 
        shift to a counterterrorism posture is far from 
        institutionalized, and significant deficiencies remain. 
        Reforms are at risk from inertia and complacency; they 
        must be accelerated, or they will fail. Unless there is 
        improvement in a reasonable period of time, Congress 
        will have to look at alternatives.

    The Commission also concluded that ``the Bureau ha[d] 
announced its willingness to reform and restructure itself to 
address transnational security threats, but has fallen short--
failing to effect the necessary institutional and cultural 
changes organization-wide.'' A subsequent press report also 
noted that the ``FBI culture still respects door-kicking 
investigators more than deskbound analysts sifting through 
tidbits of data'' and that ``the uneasy transition . . . has 
prompted criticism from those who believe that the bureau 
cannot competently gather domestic intelligence.'' In August of 
2006, Governor Kean, the Chairmen of the 9/11 Commission, 
stated that the FBI had moved too slowly to improve its ability 
to prevent future terrorist plots, was plagued by turnover in 
its senior ranks, and was ``not even close to where they said 
they would be.'' Then an April 2007 DOJ Inspector General 
report found that the professional divide between analysts and 
special agents remains a problem, and that the barriers to 
acceptance and cooperation between the two groups must be 
addressed if the FBI is to efficiently and effectively meet its 
mission of preventing terrorist acts.
    This Committee concluded that ``nearly seven years after 
the attacks of September, 11, 2001, the FBI has yet to make the 
dramatic leaps necessary to address the threats facing our 
nation.'' Our nation is facing a persistent and preeminent 
threat from violent extremism and there must be a sense of 
urgency in addressing that threat. As the committee charged 
with legislative oversight over the intelligence activities of 
the United States, it is imperative that the Intelligence 
Committee begin to mandate the pace of reform at the Bureau. I 
asked Governor Kean during the October 2007 FBI transformation 
hearing what the Committee could do to elevate certain 
intelligence functions at the Bureau, and Governor Kean told 
the committee that ``I think that under the leadership of this 
Committee, you have to make it very clear that what's going on 
up to this point is unacceptable . . . and perhaps you should 
establish goals . . . mandates . . . you say `we expect this to 
be done' as a Committee.'' This bill directs the DNI to submit 
to the congressional intelligence committees a consolidated 
report on the progress of the FBI, including an assessment of 
the metrics, timetables and corrective actions, and a 
description of the activities being carried out to ensure the 
Bureau is improving its performance. We can no longer afford to 
give such deference to the FBI regarding its intelligence 
reform. The threat is too urgent for us to not intervene.
                                                  Olympia J. Snowe.

 MINORITY VIEWS OF VICE CHAIRMAN BOND AND SENATORS WARNER, CHAMBLISS, 
                            HATCH, AND BURR

    After three straight years without an intelligence 
authorization law, we hoped that 2008 would be the year to re-
establish legislative oversight. We hoped that Members of the 
Senate Intelligence Committee would finally put aside political 
interests and focus on national security by voting out a clean 
bill that could pass the House and Senate and be signed by the 
President. We hoped that Members would see the detriment, to 
both the credibility of the Committee and to the Intelligence 
Community we oversee, of four straight years without an 
intelligence authorization law. Unfortunately, once again, it 
seems that politics won out over credibility, oversight, and 
national security.
    A majority of Committee members voted again to include a 
provision in this year's bill that was responsible for drawing 
a Presidential veto on last year's bill. They voted to send a 
political message to critics of the CIA's interrogation 
program, at home and abroad, at the expense of four years of 
accumulating, necessary legislation and sound oversight. In 
fact, they voted to send this message at the expense of 
reforming the very program they say they want to change, 
because all of the provisions in the bill which actually do 
reform the CIA's interrogation program will now likely never 
become law. This is unfortunate because there is a lot of room 
for agreement in this area and there is certainly room for 
agreement in finding a way to do what the supporters of this 
amendment say they want to do--prohibit harsh interrogation 
techniques.
    The media often report that the Army Field Manual (AFM) 
amendment does exactly that--prohibits harsh interrogation 
techniques--but that is not what the amendment says. Rather, it 
stipulates that all U.S. government interrogators be limited to 
using only the 19 techniques that are specifically authorized 
in the AFM. The problems with this limitation are three-fold.
    First, as the Director of the Central Intelligence Agency 
General Hayden has said repeatedly, ``I don't know of anyone 
who has looked at the Army Field Manual who could make the 
claim that what's contained in there exhausts the universe of 
lawful interrogation techniques consistent with the Geneva 
Convention.'' In other words, if there are interrogation 
techniques available that are legally and morally permissible 
under all other U.S. laws and treaty obligations--and we 
believe there are--why would we want to prevent our 
interrogators from using these techniques to obtain information 
that may save American lives? Additionally, innovative 
interrogators in the future may develop new techniques that are 
also legally and morally permissible that were not developed at 
the time the AFM was drafted. At a time when we are fighting a 
global war on terrorism, it makes no sense to remove legally 
and morally acceptable tools from the hands of our intelligence 
operatives.
    Second, this restriction may have unintended consequences 
that have not been fully examined. Before we legislate that all 
government agencies must use only the techniques in the AFM, we 
must make sure that these agencies can use any and all other 
moral and legal techniques. For example, currently the Federal 
Bureau of Investigation is permitted to use deception in an 
interrogation about the evidence against a detainee. The AFM is 
unclear about the extent to which such deception could be used 
in an interrogation setting. Would the FBI, therefore, be 
prohibited from using this technique? What spillover effects 
would such a prohibition have in the FBI's criminal work? These 
are serious potential consequences that need to be explored.
    Third, the list of the 19 permitted interrogation 
techniques are published in an unclassified document that is 
widely available on the Internet. We know that al-Qa'ida 
terrorists are using the AFM as a training document and are 
preparing themselves to resist questioning from our 
interrogators. We should not allow the full complement of our 
interrogation techniques to be disclosed to the world's most 
hardened terrorists.
    The AFM amendment has other problems as well. Most 
significantly, because the AFM can be changed at the discretion 
of the Secretary of the Army--and presumably at the direction 
of the Secretary of Defense, the President, and perhaps 
others--the AFM amendment would essentially delegate lawmaking 
to a service secretary or other members of the Executive 
branch. Such an abdication of Congressional responsibility 
should give all Members pause.
    Finally, the AFM is a military document with specific 
chain-of-command authorization requirements for use of certain 
techniques. These requirements are not easily transferable to 
the CIA or the FBI and would cause uncertainty for our 
interrogators.

                       A RESPONSIBLE ALTERNATIVE

    Rather than limit our interrogators to a specific number of 
unclassified interrogation techniques they can use, we believe 
a better alternative would be a proposal raised by Vice 
Chairman Bond at the Committee's mark-up which would prohibit 
the use of those techniques that are banned in the AFM. This 
alternative would provide a strong bipartisan option for 
Congress to prohibit the use of harsh interrogation techniques 
and make a statement to those at home and abroad about our 
values, while preserving the flexibility of our interrogators 
to use those techniques that are lawful, moral, and comply with 
Common Article 3 of the Geneva Conventions in the defense of 
the nation's security.
    If proponents of the AFM amendment really want to prohibit 
``torture'' as they claim, they could support a provision that 
would codify such prohibitions in statute, rather than impose 
an unclassified military manual on Intelligence Community 
interrogators that would foreclose the possibility of 
developing new lawful interrogation techniques to use against 
terrorists. An Intelligence Authorization bill that contains a 
simple prohibition against the use of specific harsh 
interrogation techniques, rather than the AFM provision, would 
actually have a chance of becoming law. We're not sure why the 
Committee chose to give the Administration another blank check 
in national security oversight, for the fourth time, by 
insisting upon a provision which they know will doom the bill. 
We would rather establish that oversight, effectively.

                                   Christopher ``Kit'' Bond.
                                   John Warner.
                                   Saxby Chambliss.
                                   Orrin G. Hatch.
                                   Richard Burr.